The Big Whale: Arab Bank Switzerland is today considered one of the most advanced banks on cryptos. What exactly do you do?
Rani Jabban: We offer almost all the services our clients can expect. We do custody of digital assets, trading, i.e. buying and selling cryptocurrencies, and we have also developed staking services on various protocols.
How long have you been doing this?
We decided to position ourselves in cryptos in 2018. Like many people, particularly bankers, I was quite sceptical about the subject. Before 2017, when people talked to me about cryptocurrencies and bitcoin, I had little faith in them. I saw it as a speculative phenomenon.
It was when I saw how it worked and how interesting it was that I said to myself that there was something there. I don't think bitcoin is going to replace existing currencies, but in any case, it's a very profound change. Blockchain is going to change the world of finance, and we need to get on board now.
Many bankers are interested in blockchain, but not cryptos. What do you think?
The two are linked. You can't get into blockchain without getting into crypto.
When did the tipping point come for Arab Bank Switzerland ?
Crypto and the banking world have this in common: you need asset custody solutions. So the first thing we looked for was a custody solution, and we chose Taurus. That was in 2019. You have to remember that there wasn't much out there at the time. The advantage of having custody is that afterwards you can connect all the services around it.
What was the hardest part of this transition?
Internally, it was easy because we prepared the ground for over a year. We signed with Taurus in December 2018, and the solution was available in 2019.
We trained all the bank's departments: IT, the back office, the middle office, the front office. It makes no sense to have just one department in its corner doing blockchain.
How many of you are in the bank?
We're a private bank, so there are only 145 of us. There are 3 people working full time on crypto issues, but anyone can take action on these issues.
You are one of the few banks on the planet to do staking. On which protocols exactly?
We do staking on Tezos, and we'll soon be doing some on Ethereum and Polkadot. We have quite special conditions for staking. It has to be as secure and liquid as possible for customers.
What cryptos are available to your customers?
There are about ten, including bitcoin (Bitcoin), ether (Ethereum), XTZ (Tezos), Dot (Polkadot). We will soon also be doing Solana and Avalanche.
We want to select tokens as minimally as possible. Nevertheless, if a customer wants a special token, we'll make sure we offer it as long as it's possible with Taurus. But we want to protect our customers, so we do a minimum of due diligence. And then there are the NFTs since 2022.
What has such a pivot brought you in terms of business?
We've had new customers, who came from the crypto world, or else customers who weren't from that world but who understood that we were an open bank in tune with the times. They see us as pioneers.
We've moved from a fairly conservative private bank to a pioneering bank that takes risks, tries things out. This has been an important choice. We feel a real sense of pride both internally and also on the side of our customers, and externally.
Our digital assets business has also enabled us to build a bridge between two historical businesses: private banking and commodities finance. It is the bridge between the two. Today we are working on a Proof of Concept for a digital Bill of Lading on the Ethereum blockchain.
Many banks are reluctant to get into cryptos because there are a lot of constraints, both technological and regulatory. What do you think?
On the technological aspects, there are companies like Taurus that make it possible to manage everything properly from end to end, and then on regulation, things are quite clear in Switzerland. Digital assets are off the bank's balance sheet.
As soon as we create wallets segregated by customer, each customer has his own wallet and owns his assets. They can go and look at their onchain assets.
The only thing customers don't have are the private keys, because we keep them for them, but they can look at everything. If we go bankrupt, all the customers get their money back because it's off balance sheet. It's outside the risk of the bank's balance sheet in Switzerland.
It's very important to bear this in mind: when you deposit your cryptos in a Swiss bank and the segregation conditions are met, they are outside the scope of bankruptcy.
You also have a strong presence on NFTs. Why?
We have indeed been very active in this area since 2022. Why is that? Because for a private bank, an art and digital positioning is entirely relevant. Unlike other private banks, we didn't yet have a private art collection, so it made perfect sense to position ourselves.
We now have a collection and we launched a prize dedicated to digital art in 2023. The first winner was Marjan Moghaddam. The second edition will take place in the spring and we will announce the winner at the end of May at the NFC Lisbon, as we did last year.
What are the plans for 2024?
Develop the staking offer, develop first-generation derivatives (put and call). We will also be looking at new opportunities in tokenisation. Things are progressing well in these areas, particularly in our target region, which is the Middle East (United Arab Emirates, Saudi Arabia).
Is Arab Bank Switzerland also exposing itself?
We test all the products we launch. It's a way of protecting our customers. We have a portfolio of all the cryptos we offer our customers. When we did staking, we first tested it on the bank's balance sheet. The same goes for NFTs.
We have always taken this approach. First we test ourselves, then we do it with a few customers we know well and finally we launch for everyone.
What interests you about tokenisation?
What interests us about tokenisation are funds and certificates that allow you to buy and sell baskets of securities. The interesting asset classes are those where we talk to the end customer and not the issuer. It has to be interesting for the end customer to invest in illiquid assets. We're talking about private equity and real estate.
One of the big news stories at the start of the year has been Bitcoin Spot ETFs. What do you think of this institutionalisation of the sector?
I see it in a very positive light. The more players are regulated, the more the sector develops and gains credibility. This will bring more liquidity and we will see a much more stable demand for cryptos.
