The Swiss market for crypto assets has seen strong growth over the past three years, a trend reflected in the trading volumes for direct and indirect investments into crypto assets, a new research by the Institute of Financial Services Zug IFZ and Swisscom shows.

An analysis of crypto asset trading activity in Switzerland on the top platforms shows an annual trading volume surpassing CHF 103 billion in 2021. Direct investments through crypto exchange platforms led in terms of trade volumes, but Swiss investors are also increasingly adopting investment products offering exposure to cryptocurrencies, including exchange-traded products (ETPs), the research found.

Between October 2020 and September 2021, crypto asset investments through the 15 largest centralized exchanges including Binance and Bitstamp amounted to CHF 92.6 billion, making up for most of crypto trading activities in Switzerland. Meanwhile, investments through the 15 largest decentralized crypto exchanges including Uniswap and Sushiswap totaled nearly CHF 4 billion.

Monthly trading volume of the 15 largest decentralized and centralized crypto exchanges for Switzerland, Source: CoinGecko (2021), Semrush (2021), via Crypto Assets Study, Institute of Financial Services Zug IFZ and Swisscom

During that period, indirect investment products, including ETPs and structured products including tracker certificates and mini-futures, totaled roughly CHF 7 billion on the SIX Swiss Exchange. SIX Swiss Exchange is one of the two exchanges where investors can purchase crypto-related indirect investment products in Switzerland alongside BX Swiss.

While volumes of indirect investment into crypto assets in Switzerland remain small, trading activity has considerably grown since late-2020 with ETPs in particular picking up steam, the report shows.

Market turnover by month, Source: Data provided by SIX, via Crypto Assets Study, Institute of Financial Services Zug IFZ and Swisscom

The Swiss and Liechtenstein crypto asset ecosystem

The inaugural Crypto Assets Study, released earlier this month, aims to provide an overview of the current state and developments in the Swiss and Liechtenstein crypto assets ecosystem, outlining key market players and sharing emerging trends.

The research identified 77 companies that offer different products and services related to crypto assets. Out of these companies, 20 companies took part in a survey conducted for the study.

The survey found that tokenization and insurance is the most represented category, with 13 companies active in the area. It’s followed by trading, brokerage and custody (11 companies each), advisory services, asset management and payments (10 companies each), know-your-customer (KYC) and anti-money laundering (AML) identification services (9 companies), staking services (8 companies), loans (7 companies), as well as discretionary mandates and exchange services (6 companies each).

Swiss mortgage bank Hypothekarbank Lenzburg and crypto startup Mt Pelerin are currently the ones providing the largest portfolios of crypto products and services, serving both retail and private clients, as well as institutional customers.

They are amongst the few providers in the two countries to address the retail market, while the majority of the companies polled focus on high-net-worth individuals, family offices and others institutional investors.

Product offerings and customer segments of companies from factsheets received, Source: Crypto Assets Study, Institute of Financial Services Zug IFZ and Swisscom

Looking at crypto investments in Switzerland, the research found that Binance is the top trading facility, recording CHF 42.7 billion in trading volume between October 2020 and September 2021. It’s followed by fintech unicorn FTX, with CHF 16.2 billion in trading volume, and Huobi Global with CHF 9.5 billion.

Annual trading volumes of the 15 largest centralized crypto exchanges, Oct. 1, 2020 to Sep. 30, 2021, Source: CoinGecko, SEMrush, via Crypto Assets Study, Institute of Financial Services Zug IFZ and Swisscom

Switzerland has been laying the groundwork to become a hub for blockchain innovation and crypto assets. In September, the Swiss Financial Market Supervisory Authority (FINMA) approved the first Swiss crypto fund, an investment fund dubbed Crypto Market Index Fund from Crypto Finance.

The passive investment fund tracks the performance of the SIX Swiss Exchanges’ Crypto Market Index 10. It’s administered by PvB Pernet von Ballmoos and custody services are provided by SEBA Bank, a FINMA-licensed Swiss bank which was recently granted a custodian license.

In 2020-2021, crypto asset adoption in Switzerland ranged between 2% and 10% of the population, different research have shown.

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