A ‘military-grade’ bunker in the Swiss Alps has opened its vaults to wealthy cryptoasset investors, corporations and institutions in search of a secure place to store their digital currencies.
Swiss Crypto Vaultexternal link is positioning itself as a quasi-private bank for bitcoin and other tokens at a time when traditional banks refuse to go anywhere near cryptocurrencies. Because the vault does not mix client assets with the company’s own balance sheet, it does not need a banking license to operate.
The vault services a growing need from high net worth individuals (HNWI), hedge funds and family offices to more securely store large amounts of cryptoassets, frequently targeted by hackers. There have even been instances of criminals attacking bitcoin millionaires in their own homes demanding the digital private keys that open the doors to their crypto accounts.
The innovation comes as a growing number of rich people and institutions are investing in blockchain start-ups via initial coin funding ICO crowdfunding schemes.
Deep in the Alps
During ICOs, start-ups generate public funds by offering tokens that can be used to operate new technologies or simply to trade for potential profits. The tokens are mostly purchased by investors in cryptocurrencies.
According to CoinDesk, an online news site, ICOs raised some $6.3 billion (CHF6.2 billion) in the first three months of this yearexternal link, easily surpassing the total accumulated for the whole of 2017. Observers estimate that more than 80% of these funds are being generated from by HNWIs and professional investors.
Leveraging Switzerland’s reputation for discretion, political stability and growing blockchain expertise, Swiss Crypto Vault has buried its “banking grade” servers deep within a secret location in the Alps. Clients can securely store their cryptoassets and withdraw them via a special web portal from anywhere in the world.
An extra layer of security requires the client, Swiss Crypto Vault and a third-party handling partner to simultaneously verify withdrawals – like the system of multiple key holders being needed to open a safe deposit box in a bank vault.
Another Swiss-based crypto firm Xapo opened a vault in the Swiss Alps, but Swiss Crypto Vault says its technology is unique.
Swiss Crypto Vault is a joint venture between Zug-based crypto financial services firm Bitcoin Suisseexternal link and Swiss Gold Safeexternal link, a company that stores precious metals, art and other valuables in alpine vaults. Clients can store bitcoin, bitcoin cash, ether, litecoin, bitcoin gold and all ERC20/233 tokens, with more planned in the future.
For small-scale crypto investors, hardware called digital wallets (the size of a USB stick) usually provides enough security to ‘cold’ store assets offline away from hackers. But a growing number of solutions are being offered for investors who pile millions into tokens.
These include the Zug-based Crypto Storageexternal link and, perhaps more surprisingly, the state-controlled telecoms provider Swisscom. The recently-formed Swisscom Blockchain division has teamed up with hardware and software manufacturers to provide a bespoke secure storage service for big investors.
“People are now investing millions into tokens,” Daniel Haudenschild, CEO of Swisscom Blockchain, told swissinfo.ch. “As soon as you get to such volumes, the usual methods of storing these assets are no longer viable.”
“We have a window of a few years before large providers start offering crypto vault services on an industrial scale. Until the big players also start making this service available, this will be a premium business line for those financial institutions that are willing to offer it to their clients.”