Transcription:
Fabian Dori (00:03):
Welcome to the American Banker Podcast. I'm Penny Crosman. Over the past several months, the Office of the Controller of the Currency has conditionally approved at least eight crypto firms for national trust bank charters following a surge in applications in 2025, including from Circle, Ripple, Bitco, Fidelity Digital Assets, Crypto.com, Paxos and Coinbase. Other crypto companies like World Liberty Financial are pending applications and Erabor received a full-fledged national bank charter. But what happens after one of these companies gets their charter? What will they need to do? What challenges will they face? We're here today with Fabian Dori, who is head of asset management at Sygnum Bank, a digital asset bank based in Zurich, that has operated as a crypto bank for more than six years. He's here to share some of what he's learned during that time. Welcome, Fabian.
(00:56):
Welcome, Penny. Thanks for having me.
Penny Crosman (00:58):
Thanks for coming. So can you describe for us what those first few years were like after you got that license? What were some of the steps you had to take? What were some of the things that you had to do to build this digital asset bank?
Fabian Dori (01:12):
Yes, with pleasure. I think that is a great question. In our context, I have to say that we started our business only the moment we received the license. So in conscious to some of the companies that you just named, which already have a running business, we really started operationally once we received the respective licenses. And with that, while most of the work had to be done after having received the license, actually our journey started before. We typically distinguish four chapters in our journey so far. The first chapter having been what we call forming the idea. That was the time before we actually got the license. Second, then establishing trust. Third, what we call opening up. And last but not least, the fourth chapter, so to say, which is really trying to lead and innovate the space further. Maybe let me go through the four chapters a bit in more detail to outline the different stages.
(02:10):
So during the first stage, forming the idea, it was really about creating the vision, the mission, what is our business strategy, whether we see an edge and the differentiation to competitors? Where do we see a business demand? How do we map that into a coherent strategic planning? And obviously, how do we get the people and the team together to then build the business? Second, once we received the license and we're sort of granted the permission to operate, we focused on getting an MVP banking suite ready with the first products, the processes, the systems, the governance framework around it, and really build a world-class governance framework and team that was all about establishing trust and making sure that we were received as a institutional great partner attracting first key clients that helped us scale the business and also gave us feedback and helpful critics and criticism to further advance our offering and our systems.
(03:17):
That then allowed us for the third step, or which was the opening up phase that was really opening up our technology platform, leveraging it and scaling it with additional clients, new markets, but also new products, trying to innovate with new product ideas also have some failures obviously with products that didn't find the product market fit and so on, but really open up and scale further. And then last but not least, becoming one of the most trusted digital technology groups on a truly institutional level with proven resilience, scalable processes and all that is needed to attract institutional investors.
Penny Crosman (04:00):
What was the hardest part of building this out?
Fabian Dori (04:04):
Yeah, I think there have been a number of challenges. I think the hardest was really to build at the core the right understanding, the right mindset, the right team to make sure that all different aspects that are required to drive innovation under the guidance of, to a certain extent, restrictive regulation to bring all those different requirements together, scale it, make it resilient, attract talent and so on. So I think that was really the key part, to build that core of the right mindset, processes, frameworks, talent, and so on.
Penny Crosman (04:48):
And when you talk about building the team, were you trying to hire a lot of lawyers and compliance experts? Were you trying to hire more crypto experts? Did you need to hire bankers to do this? What were some of the types of expertise you were looking for?
Fabian Dori (05:05):
Yeah, that's an interesting one because it really takes or it needs the right mix of the different prof lines. You need to have the technology people to innovate on the tech side. You need to have business people to design the right products and bring them to markets. You need to have a strong second line that helps keep the business alive and within the defined guardrails. So it's really quite a mix of the right talent that is required because building a business under a specific regulation is I think what many still underestimate. It takes a lot to build the risk governance, the culture, but also the readiness to withstand third party assessments from auditors and the likes. I think that is an undertaking that is sometimes underestimated by institutions, people that think about embarking on that journey.
Penny Crosman (06:08):
And when you talk about building a risk culture, what does that mean? Is it a culture where everybody's very aware of risk and risk averse or is it more like people acknowledge that risk is necessary and that there's a need to take risks within reason?
Fabian Dori (06:28):
It really entails both points. The right risk governance, the right risk culture entails both offense and defense. I think getting or defining such a governance, the right culture, the right discipline is a very comprehensive and elaborate task. It really starts with the business strategy, designing the right business strategy to allow the offense, so to attract investors to fund the business, attract talent to build business, but at the same time be conscious exactly about the defense as well. So you need to define the risk appetite, provide guardrails within which the business strategy should ultimately be achieved and that requires quite a comprehensive framework in terms of policies, directive, guidelines, processes, key controls, et cetera, but also very practically the right systems, the right contractual frameworks with your outsourcing partners, et cetera. So it's really a comprehensive and elaborate task to design and implement a comprehensive risk governance compliance culture that both allows for the orphans, but also for the defense.
Penny Crosman (07:51):
One thing I wonder is from a technology point of view, is it more challenging to run a digital asset company that's also a bank than to run a traditional bank? I mean, either way, you have to have a really solid well-running core system to handle all your daily transactions in a really fireproof fail safe and 100% uptime kind of way. Does combining digital assets with banking require another level of technology expertise beyond banking itself?
Fabian Dori (08:29):
For a certain extent, I believe it extends the technology understanding that is required because it necessitates specific knowledge on specific parts of the value chain, such as custody elements, but also forensic elements to do transaction monitoring, to understand the technology risk that is associated with specific protocols and so on. So I would say in certain sense, yes, it's an extension of the technology understanding that is required, but running a digital asset bank I think is always placed a bit at intersection of technology, regulation, innovation, and it's always a bit of a constant tug of war between those three elements. I think it's always one needs to navigate along those three dimensions in a very farsighted vault, but also in a cautious way.
Penny Crosman (09:29):
So one thing I wanted to ask you about was engagement with regulators. And then here in the U.S., a bank that has a full-fledged deposit-taking charter like Erebor is one crypto company that's just received one of those is believed to be under a much stricter supervision and much heavier regulatory burden than a company that gets a national trust charter, which is a more limited charter that provides companies the ability to custody assets and so forth. What is it like where you are? Is there that distinction that there are companies that have a more limited charter and therefore the regulators might be more hands-off versus a company like yours that has a full-fledged banking charter?
Fabian Dori (10:22):
Yeah, that's an interesting one. There are also nuances in the business models that you see under the Swiss regulation and there are different categories for banks depending on the complexity, the size, the international exposure they have and so on. And the more complex the business, the more system relevant the business, the more international the business, et cetera, the more rigorous are, for example, capital requirements or the sophistication level for risk management tools and so on. So I think there's a certain nuance in terms of what is required depending on the complexity and the system relevance of the different banks. But we only know, so to say, one full banking license and then it depends on the articles of association, what the specific scope of the bank is. And whenever a bank wants to increase the scope to additional business, et cetera, change to those articles of association are required, which needs an exchange with the regulator as well to make sure that this additional scope is covered by processes and that the different requirements that are needed are really fulfilled to allow for that extended scope.
Penny Crosman (11:53):
So can you describe your business model at Cigna Bank today? What kind of products do you offer? What do your customers look like? What does the business look like?
Fabian Dori (12:07):
Well, in principle, we really set out to build a bridge between what we call traditional finance and future finance, so to build a compliant and regulated bridge between traditional finance and future finance. And then we cover a significant part of the value chain that is required to serve clients in that space, starting from custody over brokerage to credit lending, et cetera. But it's important to highlight that we are regulated in Switzerland in certain other jurisdictions and that we focus our business activities within those jurisdictions.
Penny Crosman (12:47):
And who are your typical customers?
Fabian Dori (12:49):
That's really a broad set. We are, I would say, an integral part of the crypto asset ecosystem and have a significant client base out of the crypto space. So be that crypto foundations, be that exchanges, being asset managers, but also then more traditional finance oriented or traditional investors so far, be that family offices, auto banks, external asset managers, individuals, high net worth individuals. So it's quite a diverse group of investors.
Penny Crosman (13:23):
So do you have any advice for companies that are just starting out on this path? Maybe they just got one of these national trust charter licenses or maybe they're about to get one. What are some things that they should maybe look out for or think about as they build out their own version of a digital asset bank?
Fabian Dori (13:45):
Well, first of all, I'm really excited for these companies. My advice would be to enjoy the ride because what is now happening in the U.S is what we have to say been leading through over the last couple of years, namely that regulatory pathway for crypto native banking is established. But I think the key element is to keep in mind that when you get the chart or that permissions you to start that kind of business, it's not yet the end of the journey. It's rather, so to say, the start of that journey, because the hardest part of the work actually begins, you need to operate under that regulatory framework. You need to have the relevant processes in place, the capabilities in place and so on. So we always call it a bit of a marathon sprint because on the one hand, the crypto space is really extremely dynamic and fast paced and it requires, so to say, a constant sprint to keep up with those changes.
(14:51):
At the same time, we are still very early on in the adoption of digital asset and in the digitization trend in general. So we're really building for the long term in that sense we are on a marathon and hence we always call it a bit of a marathon sprint and I think that is exactly what those companies probably should prepare for.
Penny Crosman (15:13):
All right, that sounds like good advice. Well, Fabian Dori, thanks so much for joining us today. And to all of you, thank you for listening to the American Banker Podcast. I produced this episode with audio production by WenWyst Jeanmary, Adnan Khan and Anna Mints. Special thanks this week to Fabian Dori at Sygnum Bank. Rate us, review us, and subscribe to our content at www.americanbanker.com/subscribe. For American Banker, I'm Penny Crosman, and thanks for listening.
