Key insights from the Web3 Banking Symposium in Geneva

Known for its role in global finance, the first-ever Web3 Banking Symposium in Switzerland focused on the future of money. Organized by the Crypto Valley Association, the event brought together minds from across the financial spectrum.

BeInCrypto spoke with Ilya Volkov, board member of the Crypto Valley Association and CEO of Uhodler, a leader in integrating traditional banking with digital assets. He shared his insights with Web3 on how banking is evolving, discussing the current state, future opportunities and what it means for customers and institutions.

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Not your average Crypto event.

The Web3 Banking Symposium, held in Geneva in early March, is the first event for the banking industry and the integration of digital assets with traditional financial institutions. Organized by the Crypto Valley Association, it attracted more than 300 participants and covered five key topics: legal issues, AML and compliance, tax and accounting, infrastructure and product development, presented examples for crypto-friendly banks and blockchain businesses versus traditional banking. Rules.

“The event was truly unique as the banking industry, normally very closed, opened up to discuss innovations, marking a significant turning point, especially after the series of failures in the US over the past years highlighting banks' interest in cryptocurrencies. . It is very difficult to sway bankers to come and openly discuss some new subject. In this case, the CVA was able to do, bringing value to all the industry».

The symposium highlighted Switzerland as a global blockchain hub and brought together representatives from banks, entrepreneurs and politicians from all the country's linguistic regions to emphasize the country's commitment to supporting the sector at the regional level.

“The first cryptocurrency banks that appeared in Switzerland in 2019 caused a lot of skepticism among traditional players. However, over time, they felt FOMO, realizing the possibility of missing out on a promising trend. This has led to a rapid growth of the market where traditional financial institutions have started to actively integrate cryptocurrency services in response to the needs of their customers. Even the most conservative bankers now understand that banks can become irrelevant without catering to the younger generation and retaining existing customers.

Evolution, not revolution.

Speaking about the current situation, Volkov said that cryptocurrencies are not a revolution, but an evolution in the financial field. He describes Web3 Bank as a financial institution that combines centralized and decentralized services, investment products from traditional and cryptocurrency areas, and a 360-degree view of payment and merchant services using blockchain technologies for payment processing. This trend represents the merging of innovation with the financial industry, similar to the evolution of mobile phones and contactless payments.

“Absolutely every human invention goes through this process. 30-40 years ago mobile phones were unimaginable. Thanks to companies like Nokia, it is possible and now needed. Similar things are happening in the payments industry. Apple Pay and Google Pay quickly went through this cycle; Now, contactless payments are essential. If we are talking about retail banks, they are required to attach such things to their cards. And what is happening is that crypto is now at the expected level. Culture Bank customers are asking how to buy bitcoins, whether they can buy property with the token, how to store it and so on. This suggests that it will soon be fully required.

Examples of traditional financial institutions such as PostFinance from Simium or Amina (formerly Seba Bank), as well as large banks and companies including Société Générale (Forge), Citibank and the like, provide infrastructure for St. Galler Cantonalbank. Visa, confirm this trend. They provide services related to digital assets and develop in cooperation with crypto-specific companies.

Now trending in Web3 banking

As our conversation continued, the CEO named two key trends that stand out in the current Web3 banking landscape. The first relates to active buying and selling of established cryptocurrencies such as Bitcoin and derivatives such as ETFs. According to Volkov, this is the most obvious trend that customers of the most conservative banks are actively exploring.

A second trend is the virtualization of real assets, such as Picasso works, from collateral to art, providing new transparency and efficiency through blockchain. These tendencies develop the idea of ​​marketing and ownership and demonstrate the adaptation of traditional and innovative banks to new market needs.

Many banks focus on tokenizing old securities and other assets. Several projects are working with gold, diamonds and real estate. Cintum Bank did a very interesting project a few years ago: here in Geneva they exhibited several Picasso works. We've all seen this buzz with NFTs. Of course, it adds some hype to the market, but besides all that, there are real deals where we talk about real art.

Volkov points to the growth of credit and savings, the successful integration of crypto-tools with financial services, indicating the need to introduce these services to the audience. Thanks to regulatory clarifications in Switzerland, it is attracting attention and underlines its potential to compete with traditional financial instruments. However, the current economic situation needs to be monitored.

“What is it worth to the average bank customer? It's capital placement on interest. Currently, Ethereum pays you 4.5% per year, and US Treasury bonds pay 5%, so when choosing between them, many customers go to bonds. Here we have normal and healthy competition between different instruments. One day the economic environment will change, money will be cheaper, DeFi will pay more interest than TradFi. But technically, everything is ready – the regulatory framework, at least in Switzerland, is clear here».

Critical steps for success

Uhodler's CEO highlights five key points when discussing the process of starting a cryptocurrency business in a bank:

Regulatory compliance and accounting. It is important to consider the differences in regulatory requirements and accounting for KYC/AML compliance for crypto transactions. Although it seems similar to the traditional requirements, the cryptocurrency sector has special customer due diligence and financial packaging requirements Blockchain infrastructure. Secure storage, existence of wallet systems, management of different blockchains and the ability to work with smart contracts Liquidity. Integrating cybersecurity with liquidity providers in the cryptocurrency and traditional financial sectors. Blockchain infrastructure is vulnerable to attackers and bad actors 24/7, 365 days a year.

Based on this list, the CEO identified four important areas for developers looking to partner with a traditional bank. First, he highlights the importance of custodial services by citing the example of Metaco, which developed a unique solution and was acquired by Ripple. This shows room for new entrants, even in a competitive environment. The second aspect provides liquidity, it is important to integrate with different players, including exchanges and OTC tables, Talos as a successful example.

Volkov points out the importance of developing KYC and AML compliance solutions. Despite the seemingly mature market, there is room for innovation given the ever-changing regulatory landscape. Travel law and money transfer regulation require fairly straightforward automation, so we highly welcome talented developers to oversee the entire regulatory environment. Another trend that needs attention is the development of white label solutions for banks that want to try new technologies without building everything from scratch.

Inevitable integration

In his closing remarks, Uhodler's CEO touched on the “sad subject” of the transition from centralized to decentralized asset storage and management, stating that this will become a reality in the near future. This shift requires banks to combine these approaches and be flexible to meet customers' needs for decentralization.

“Money must be decentralized. But at the same time, any customer, whether institutional or retail, must request from a bank or financial institution. Then standard mechanics will be used as traditional finance. The topic of non-collateralized wallets for conventional financial institutions is now very painful. But in a few years This trend will become reality.”

The convergence of traditional banking and the crypto industry is imminent. Banks that work with cryptocurrencies are showing their balance sheets and are under the supervision of regulators, which shows that such a model is working. At the same time, there are challenges on both sides of adapting the exchange to regulation and implementing new technologies when banks move to digital assets.