By Brenna Hughes Neghaiwi
ZURICH (Reuters) - Wealthy clients of Swiss private bank Falcon will be able to store and trade bitcoins via their cash holdings with the bank from Wednesday, a move that signals the traction the virtual currency is gaining even in slow-changing asset management.
The group's new blockchain asset management service is being offered in partnership with cryptocurrency broker Bitcoin Suisse.
"We are proud to be the first-mover in the Swiss private banking area to provide blockchain asset management for our clients," Arthur Vayloyan, Falcon's global head of products and services, said in a statement.
"Falcon is convinced that the time is right to enter this nascent market and it is our firm belief that this new product will fulfill our clients' future needs," he said.
Bitcoin, the primary cryptocurrency, relies on "mining" computers that validate blocks of transactions by competing to solve mathematical puzzles every 10 minutes. The first to solve the puzzle and clear the transaction is rewarded with new bitcoins.
While some remain skeptical, investors have begun warming to the technology, wooed by its explosive performance and the potential that the currency can compete with gold and government-issued money as a store of value.
Fidelity Investments said in May that clients with bitcoins and other virtual currencies held on digital asset exchange Coinbase would be able to see their holdings on the Fidelity website, making it one of just a handful of large financial services firms to integrate digital currencies into its website.
The virtual currency hit a record of almost $3,000 last month but has fallen over 20 percent since then to $2,375 on Wednesday. Its value has still more than tripled in the last year.
Falcon, one of the Swiss banks ensnared in the Malaysian corruption scandal surrounding the troubled 1MDB fund, said the new offering was part of its strategic repositioning.
The Zurich-based bank said its bitcoin asset management product had regulatory approval from Swiss financial watchdog FINMA, which declined to comment on individual providers or products.
"It has been a pleasure assisting Falcon in realising this new product, which is nothing less than a historic milestone for the entire crypto space," Bitcoin Suisse Chief Executive Niklas Nikolajsen said.
(Reporting by Brenna Hughes Neghaiwi; Editing by Edmund Blair)