Wyden board member Andy Flury in an interview: “Banks want a piece of the crypto pie”

private banking magazine: You are convinced that cryptocurrencies belong in asset management. Why?

Andy Flury: Bitcoin and co. have become an established asset class and have entered the mainstream. The price history and the data allow institutional investors to analyze them and manage the risks accordingly, just like with all other asset classes. At the same time, more and more private investors are asking their banks for secure and convenient custody.

How has the attitude towards cryptocurrencies, NFTs and the like changed in the industry of institutional investors and asset managers in recent years?

Flury: At the beginning, institutional investors' aversion to Bitcoin prevailed. It was foreign, it was wild, it was unbridled. Cryptocurrencies were first ridiculed and then actively opposed. This is no surprise, because financial instruments are traditionally developed by and for institutional investors in an initial phase. Only later do private investors adopt them. In the crypto market, the development went the other way around. It was computer nerds who first discovered Bitcoin as a decentralized currency and thus challenged the established financial system. Then came the first brave private investors. All of this was seen as an attack on the traditional financial world. And now, 15 years later, crypto assets are being increasingly regulated and integrated into the existing financial system. With this regulatory security behind them, institutional investors and banks can now include crypto assets in their product portfolio.

What hopes do your customers have regarding digital assets and cryptocurrencies?

Flury: Banks want a piece of the crypto pie. They see that a lot of new business is simply bypassing them and that their own highly profitable crypto ecosystem has developed. With increasing regulation, they can now connect to this new market and also offer their customers the opportunity to trade in crypto assets, thus exploiting their bank's existing customer potential. Bitcoin is thus becoming an interesting source of income for the established financial industry.

And what concerns do they express?

Flury: The time for skeptics is over. We no longer need to convince people. The banking world has now also realized that Bitcoin is here to stay. Completely new business models are emerging in the financial sector. Our discussions with bank representatives are about covering the special features of crypto trading and we are discussing the best legally compliant solution with our banking partners at an operational level.

Will cryptocurrencies continue to rise in value as rapidly as they have in recent years?

Flury: Nobody can predict markets. Anyone who does is simply lying. Basically, the thousands of crypto assets are not comparable with each other. In this respect, no blanket statements can be made. However, the adoption of Bitcoin as a leading crypto is far from complete. Quite the opposite, we are still at the beginning of a development. The supply of Bitcoin is limited and demand is constantly increasing. If investors add just 1 to 3 percent of Bitcoin to their portfolio, we will see very different prices. If the thesis of digital gold replacement is correct in the case of Bitcoin, there is still a lot of room for improvement. If the thesis of global means of payment is correct, there is even more room for improvement.

About the interviewee:

Andy Flury is CEO of the crypto service provider Wyden, which enables financial service providers to trade cryptocurrencies legally for themselves and their customers. Wyden's order and execution management platform (OEMS) covers the entire trading cycle and supports the integration of custody, core banking and portfolio management systems.