🏦 TradFi Can't Ignore Crypto?! 😲

As crypto, that cheeky little rascal, continues its transformation from a mere blip on the radar to a proper asset class (who’d have thought?! 🤪), the old fuddy-duddies at traditional financial institutions are finally peeking over their spectacles. In a rather candid chinwag, Alessandro Fuser, the Head Honcho of Sales at Crypto Finance (a firm that helps banks tiptoe into the digital asset swamp 🐊), spills the beans on how regulation, especially in Europe, is finally chasing after innovation.

Fuser, with a glint in his eye, explains how these institutions are shifting from “Oh, no, not crypto!” to actually doing something about it. He chats about the importance of trust (as if that’s easy to come by these days 🤔), and why the “start small but start now” approach is the bee’s knees. From the sticky aftermath of recent hacks to the tantalizing promise of deeper liquidity (whatever that means! 🤷‍♂️) and the landmark partnership with Clearstream (ooh, fancy!), this conversation maps out the ever-evolving role of crypto infrastructure in the world of mainstream finance. Blimey!

Fuser on Crypto Finance Bridging TradFi and Crypto

At the end of the day, Crypto Finance is like a bridge 🌉, helping banks that are a bit curious about crypto to launch services across trading, custody, and post-trade settlements in a way that doesn’t land them in the soup. My job, as the head of sales, is to guide them through this jungle 🌴 in the safest way possible. With all the questions that pop up, we help them get familiar with the idea so they can embrace new asset classes like crypto without too much fuss.

Trust is as important as a good cup of tea ☕. Generally, it’s tricky to trust something when you don’t have answers. But now, in 2025, the answers are finally here! The regulatory market is playing catch-up, especially in the European Union. So, a lot of what we do, especially since we’re based in Switzerland 🇨🇭, working with Swiss banks that are already dabbling in the space, is to show others how similar companies have managed things. We suggest starting small, being conservative, and gradually adding more bells and whistles, so they don’t risk their reputation. They can take advantage of the opportunities of crypto as an asset class and offer a service to their customers that’s up to snuff.

Shifting Attitudes and Regulations in 2025

The biggest change is that even though everyone knew regulation was coming in Europe, it’s actually here now! 😮 Because of this, many banks are actually starting projects they were just dreaming about before. Now they know what they should and shouldn’t do through experience.

The speed at which these projects are being formalized is much faster now, mainly because of the elections and the increased competition from the United States, which is becoming more crypto-friendly. So, this is a big deal. I used to talk about fragmentation in the market when it came to custody and liquidity.

Now, there are many initiatives that are making the landscape more efficient. Some of these are happening at a crypto-native level. I’m thinking about off-exchange services, which reduce your risk and allow you to have exposure to markets. But it’s also true on the custodial front, with companies like Clearstream, which is a traditional ICSD offering the new asset class without reinventing the wheel. They’re simply allowing banks to use their existing connections to unlock crypto. Clever, eh? 💡

Crypto’s Agility vs. TradFi’s Caution: Finding Common Ground

I like the contrast. ☯️ I don’t think the two approaches have to be enemies. You can have a secure, compliant setup that isn’t so boring or conservative that you miss the boat. That’s where it makes sense to experiment and “break things” within a safe environment. Now, Crypto Finance, being a regulated entity, has more rules to follow. But we keep innovating by partnering with all sorts of players in the market to make our service better and future-proof it without risking our reputation or the status quo. We’re like a cautious but curious cat! 😼

I’d like to add one thing: our experience is mostly with regulated clients, and we always say, ‘start small, start simply, but do start’. That’s what’s been missing in the past. The uncertainty and complexity of launching something new often stopped the intermediaries from getting involved, which meant less consumer protection because the service providers were coming from a completely different angle.

So, we push to get started with simple trading and custody, allowing banks and product issuers to gain experience. For example, a product issuer might start with a single token in an ETP. It’s not revolutionary, but it helps them understand the flows, and then they can add complexity, like staking and borrowing/lending.

Adapting to the Pace of Traditional Finance

To some extent, decision-making is still slow in the regulated traditional financial space. But I’ve also seen crypto projects being formalized and executed much faster than other asset classes in the past. There are two reasons: the market has validated crypto enough, and the competition from retail brokers, neo-banks, and crypto exchanges is a threat to traditional players, especially retail banks.

There have been outflows for the past few years, which have hurt some banks. More importantly, the rate at which those outflows are happening is raising alarms. So, the banks are acting. They’re making sure they have the right knowledge and talent, and they’re starting somewhere. Better late than never, eh? 🐢

Neo-Banks vs Traditional Banks: A Shift in Custody Models

I think there’s definitely some disruption happening. The underlying service is being packaged differently, but the substance isn’t too different. Some of the “sexier” neo-banks that offer cash accounts and investment products are good at showing specific sides and hiding others. People generally think traditional banking is more expensive.

And broadly speaking, that’s probably true, considering the infrastructure they have to support. But even crypto exchanges cycle between buying, storing, and selling crypto assets, and FX still generates significant fees. Customers probably don’t realize it, and it’s still an exotic market, not commoditized yet. So, it’s normal for fees to be higher than for a security that’s been around for decades. Nonetheless, it’s an attention economy, and TradFi is paying attention. 👀

Managing Security Concerns After Major Exchange Hacks

It always raises eyebrows. It was very unfortunate that the hack occurred. I won’t comment specifically on the matter, but it was managed in a way that showed maturity compared to past scandals, like Terra Luna depegging or the FTX scandal. The market is reacting less negatively now. A bank or asset manager with trillions of assets has to unlock access to an asset class while maintaining the same risk, compliance, and security standards.

In some ways, it’s positive because it triggers the right questions. I don’t think there’s a “trust issue” in the market because today, in 2025 (and I’d say it was true last year too), there are institutional-grade solutions that are as bullet-proof as they can be. Fingers crossed! 🤞

At Crypto Finance, we’re a regulated entity, so we have standards to maintain. We always innovate without forgetting the core, which is security. Crypto introduces complexity, and the finality of transactions is different from traditional capital markets. Private key management is new to many, and we make sure we keep it sophisticated without over-engineering. We stick with battle-tested technology. That’s generally where the market is too.

How Bybit Differentiated Itself from FTX

What happened with Bybit is very different from the past. There was more support from the community. There was an issue with the technology, and it was unfortunate that there was an attack, but the market showed a sense of “we’re all in this together”. A crypto exchange has a different starting point compared to other service providers tailored to financial institutions.

Exchanges started early, mainly with retail clients, and as they became more successful, they invested and became more sophisticated, secure, and licensed. But it will take time to reach a level of security that’s sufficient for larger traditional financial institutions. Or maybe they’ll never get there. That’s why companies like Crypto Finance and its rivals exist: to act as a regulated counterparty between the market and the client.

Future Partnerships in the Pipeline

Companies like us, and other regulated brokers who already have MiCA licenses, have had relationships with the market for many years. This is generally tied to token availability. We need to source liquidity from different sources, also for disaster recovery and business continuity.

There’s nothing new, and brokers like us will continue to grow their relationships with the market in a way that doesn’t expose clients directly. If it did, the value chain would become weaker. But I’m seeing rapid growth in the opposite direction, where crypto exchanges and other retail venues are becoming more sophisticated.

As the existing distribution channels in today’s market become more involved in the asset class, they’re the ones who already have a relationship with the end customers. So, customers aren’t likely to abandon these rails, except for the early adopters and maximalists who have dominated the market for the past few years. So, the market has an incentive to root its flow to these new distribution actors, like banks, and use them as aggregators.

Suddenly, there’s a shift from a direct relationship between the customer and the exchange to the bank. It allows exchanges to keep receiving flows, but it also protects the final consumer more, just because of the nature of the bank in between.

What’s in Store for Q2?

Yes, there will be exciting announcements in Q2! 🎉 But I wouldn’t be doing my job if I didn’t mention the partnership between Clearstream and Crypto Finance. We’re both owned by Deutsche Börse Group, and this is the first time we’ve seen an international central securities depository and global custodian unlock access to all its clients with zero project cost, using Crypto Finance as the additional self-custodian link.

As far as I’m concerned, I expect the market to react positively to the new stablecoin regulation coming in the United States. All eyes will be on the US this year. If the first few banks come in and more products get approved, Europe will have to change speed. Europe is already doing a good job, but they’ll have to step it up even more, and I’m looking forward to more competitiveness in the market. May the best bank win! 🏆

2025-04-10 20:59

🏦 TradFi Can’t Ignore Crypto?! 😲