Don't be afraid of crypto

Bastian Stolzenberg
Director, Blockchain Assurance, PwC Switzerland

Article overview

A long history in brief

Would you invest in crypto assets? If you’re raising an eyebrow right now, you’re in good company. Despite significant progress, there is still a great deal of uncertainty surrounding the plausibility and future viability of blockchain and crypto assets.

The invention of blockchain – also known as distributed ledger technology (DLT) – dates back to 2008. The financial crisis had severely damaged investor confidence in traditional financial systems with banks as intermediaries. Blockchain was intended to change that. In its decentralised setting, every participant helps to control the system, eliminating the costs and mistrust associated with centralised administration.

The cryptocurrency Bitcoin is considered the first application of blockchain. It was followed by numerous crypto assets. This term includes other cryptocurrencies such as Ethereum and Solana, so-called non-fungible tokens (NFTs) as unique crypto assets, and tokenised real assets. Tokenisation involves converting ownership of a material or digital asset in the real world into a digital form – a token. Stablecoins, for example, aim to tokenise more stable assets such as fiat currencies or precious metals. Crypto assets are mostly traded on traditional financial markets, crypto exchanges or on DLT-based decentralised trading platforms – better known as decentralised finance (DeFi).

Pioneers from the outset

The Swiss crypto industry is one of the oldest and now largest digital marketplaces in the world. The Swiss regulator has been involved since the emergence of the technology and promptly created an appropriate legal framework. By doing so, it energised market activity and steered it in a manageable and orderly direction. In Switzerland, not only digital financial service providers but also traditional banks now offer a wide range of crypto assets for institutional and private investors. According to the Swiss Blockchain Association, Swiss crypto unicorns secured financing of USD 586 million in 2024. This is approximately 8 percent more than in the previous year.

Investing is becoming mainstream

We currently see particularly high potential in the tokenisation of real-world assets, such as traditional investment products like shares or investment funds, real estate, works of art, luxury goods, patents and data. The deliberate division of assets into fractions can accelerate the pace of trading, reduce ownership and transaction costs, and increase the liquidity and thus the tradability of previously illiquid assets.

There are still a number of technological obstacles, particularly with tokenised products. For example, there is a lack of trading platforms with large trading volumes that use uniform and interoperable technologies. And there are still only limited internationally harmonised regulations and standards for non-discriminatory market access in this sub-sector.

Institutionalisation as the goal

With the growing interest in DLT applications, there is an increasing need for security regarding the trustworthiness of providers and offerings. This is precisely where our blockchain assurance services come in. My teammates and I audit custodians and their custody and trading processes for crypto assets, among other things. In doing so, we ensure that appropriate controls are in place for secure custody and that end customers can actually access their digital assets when they need to. Custodians can share the results of our audit with their end customers, thereby ensuring greater trust and transparency.

Committed to an industry of the future

Just like the Swiss regulator, we at PwC have been pioneers in the crypto sector since its inception. Together with our global network, we have adapted our audit strategies and tools to the specific characteristics of DLT applications and continuously refined our audit expertise.

Today, we are a leader in auditing crypto custodians and providers in Switzerland. We know the industry and the regulatory landscape inside out. We understand the opportunities offered by the technologies and tools used, as well as the risks they pose to providers and end customers. With our experience and the objectivity of our audit work, we help to reduce counterparty and technology risks for market participants and reward them with the label of institutionalisation.

With heart and mind

It is important to me to dispel stakeholders’ uncertainties and fears with regard to blockchain and the crypto industry. The crypto world is no longer an unregulated Wild West. Through our auditing and consulting activities, my colleagues and I help to strengthen trust in reputable market players. My vision is that in a few years’ time, investing in crypto assets will be as reliable and secure as investing in gold or securities.