Serge Kaulitz – Institutional Bitcoin: Lessons from Inside a Swiss Bank

What does it actually take to bring Bitcoin into a 175-year-old state-owned bank with a 70 billion balance sheet? At BTC Prague, I shared the honest, unglamorous answer: nearly a decade of grinding through risk committees, board skepticism, and legacy systems — one hurdle at a time.

No Shortcuts to the Top

We started our Bitcoin journey in 2016. Like mountaineering, there are no shortcuts to the top. Back then, every conversation hit the same three walls: it’s for criminals, it’s a get-rich-quick scheme, or it’s too volatile. We didn’t want to argue about that. Our goal was to analyze the technology, understand it deeply, and find out how it could genuinely benefit our customers and our institution.

Getting Your Hands Dirty

The first four years were pure market analysis — identifying products, solutions, and how we could integrate them into our legacy systems. We studied private key custody, AML requirements, 24/7 trading infrastructure. Things our organization had simply never dealt with before. We even integrated Lightning Network in our staff restaurant to see how it worked in practice. Employees and customers were surprised by how easy it was. That hands-on moment mattered more than any slide deck.

Building Custody the Right Way

Our custody build took three years and followed a three-step approach. First, a one-and-a-half year period of identifying every risk vector — operational, technical, DDOS attacks, even how to generate truly random numbers in a regulated environment. We threw dice. Literally. Second, a full key ceremony that lasted three days — not five minutes. Certified laptops, audited processes, multiple people verifying every step. Third, another one-and-a-half year operational readiness audit. The result: we hold our own private keys. We are not dependent on any counterparty. Not your keys, not your coins — that principle applies to us as an institution too.

Bitcoin-Backed Lending: Winning the Emotional Battle

The second use case was Bitcoin-backed lending — and it’s deeply emotional inside any institution. The volatility objection never goes away until you prove it with your own data. We back-tested five years of Bitcoin price history, including Terra/Luna, COVID, and multiple drawdowns. The conclusion matched what research from firms like Fidelity Asset Management already showed: Bitcoin is not the most volatile asset in a diversified portfolio, and its volatility is declining over time. We also showed that Bitcoin’s 24/7 liquidity actually reduces collateral risk compared to traditional assets — you can act on a margin call at any hour. Data helps, but expect the emotional debates to continue regardless.

Four Things That Make Institutional Bitcoin Work

From our experience, four elements are essential. First, a clear regulatory framework — Switzerland’s DLT framework gave us the foundation. Second, a real business opportunity — ask your customers what they want. Many prefer custodying Bitcoin with their bank because it fits into their existing relationship and e-banking environment. Third, deep technology knowledge — you need to understand UTXOs, key management, Lightning, and how the protocol evolves. Fourth, and most importantly: get your hands on it. You cannot understand this by watching slides.

The Next Phase of Bitcoin Adoption

Today, our institution offers Bitcoin custody, transfer, and trading to 300,000 clients. Thanks to Switzerland’s regulatory framework, roughly 50% of the Swiss population — around 4 million people — already have access to regulated Bitcoin services. We educate our employees, and we are now part of the first European Bitcoin economy course taught at university level. Institutional adoption is not a threat to Bitcoin. It is simply the next step in its evolution.