Bank Frick launches certificate for cryptocurrencies

18. Sep. 2017

Bank Frick has become the first Liechtenstein bank to launch a certificate based on cryptocurrencies. This offers investors an easy way to add cryptocurrencies to their portfolios. To address the complexity inherent in cryptocurrencies, Bank Frick has had to put the relevant structures in place and build up a wealth of know-how in this field.

The Liechtenstein-based Bank Frick has made its Cryptocurrency Basket Tracker (CCT) available to qualified and institutional investors. The investment objective of the cryptocurrency certificate is to participate in the performance of the underlying assets across its five-year term. Bitcoin and Ether are the assets underlying the CCT. The certificate is currently being issued as part of a private placement.

Bank Frick’s CCT was issued on 1 July 2017. In an initial phase, the certificate was exclusively offered to qualified investors at the Bank. “We have used the ten weeks since then to examine our internal processes and to comprehensively test the interfaces with external service providers and other technical components,” explains Raphael Haldner, Head of Funds and Issues, and leading product developer for the certificate at Bank Frick.

“The technology has great potential”

Now Bank Frick is also giving external clients who fulfil the required criteria the opportunity to participate in the performance of cryptocurrencies. “With this product, we are offering institutional and qualified clients a very easy way to gain experience in these new, exciting financial instruments,” adds Bank Frick’s crypto-expert Mauro Casellini, Head of Business Clients and Payment Service Providers: “In recent months, the developments and insights in the area of cryptocurrencies and the underlying blockchain technology have shown the great potential of this innovative technology. However, it has to be noted that investments in cryptocurrencies are speculative and involve extremely high levels of volatility, where, in a worst-case scenario, a total loss is possible.”

If a person does not have an in-depth knowledge of the underlying technology, directly holding cryptocurrencies involves a high level of risk. “You have to view cryptocurrencies as a type of digital cash,” explains Casellini. “This ‘cash’ is held in a digital wallet in the form of complicated numerical codes, for example as a software wallet on a smartphone or a stand-alone hardware wallet. In the past, there have repeatedly been dramatic hacks, where large sums of crypto-money have been stolen. With our extremely defensive approach, our Bank is able to offer a very high level of security in this regard.”

High security standard

At Bank Frick, cryptocurrencies are held in what are known as “cold storage” wallets, i.e. wallets that are not connected to the Internet. In turn, backups are also made of these. The encrypted wallets and their backup copies are kept in safe deposit boxes at various locations (georedundancy). “The multi-signature solution we use also increases security,” explains Raphael Haldner: “Each transaction has to be signed off by more than one person before it can be executed.”
Bank Frick works together with Bitcoin Suisse Ltd, which acts as a broker and settles purchases via various exchanges around the world. Bitcoin Suisse Ltd brings together liquidity from the various trading venues in an order book, which ensures excellent execution.

White-label solutions

“The technical requirements for crypto-financial instruments are extremely high. However, thanks to our expertise, we are able to launch own products and white-label products extremely quickly,” says Haldner: “We are currently dealing with various requests from product and fund promoters.”

The CCT was developed under the aegis of Bank Frick’s future-oriented digital strategy, which actively addresses and helps shape the rapid changes in the financial sector. Many years ago, Bank Frick recognised that in future, new business fields and business models would be required in order to succeed in the changing market conditions going forward. Bank Frick’s semi-annual results (see www.bankfrick.li) shows that the new digital business models are gaining real ground.

 

 

Mauro Casellini, Head of Business Clients and Payment Service Providers

Bank Frick’s crypto-expert Mauro Casellini: “In recent months, the developments and insights in the area of cryptocurrencies and the underlying blockchain technology have shown the great potential of this innovative technology.” 

Press photo Mauro Casellini

Raphael Haldner, Head of Funds and Issues

Raphael Haldner, Head Funds and Issues: “The technical requirements for crypto-financial instruments are extremely high. However, thanks to our expertise, we are able to launch own products and white-label products extremely quickly,”

Press photo Raphael Haldner

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About Bank Frick

Bank Frick is a family-run Liechtenstein bank with headquarters in Balzers. It was founded in 1998 by Kuno Frick Sr, with a 70 per cent majority held by the Liechtenstein-based Kuno Frick Family Foundation. Minority shareholder Net 1 UEPS Technologies, Inc. (Net1) holds 30 per cent of Bank Frick’s share capital. Net1 is listed on the Nasdaq stock exchange in New York.

Bank Frick focuses on private clients, business clients and fund clients, who are supported by specialised departments.

Bank Frick is the only bank in Liechtenstein with acquiring licences from Visa and MasterCard.

For qualified market players Bank Frick develops tailor-made funds and acts as a custodian bank.

In the first half of 2017, the Bank with its roughly 78 employees generated a profit of CHF 2.7 million and managed assets in the amount of CHF 2.9 billion. As at the end of June 2017, the balance sheet total was CHF 990 million. The capital base stood at CHF 85 million.

Bank Frick operates a branch in London.

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