LUKB Becomes First Swiss Universal Bank to Accept Crypto for Loans

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Switzerland has always been known for its careful approach to finance, with banks that pride themselves on reliability and measured growth, but Luzerner Kantonalbank (LUKB) has been steadily introducing changes that reflect how modern clients now manage money. In the spring of 2024, the Lucerne-based bank began offering trading and custody services for digital currencies, giving customers a safe, regulated space to buy and store assets like Bitcoin and Ethereum. This month, it has taken that step further by allowing those same assets to be pledged as collateral for loans, a first among universal banks in Switzerland.

Responding to Market Reality

The leadership at LUKB has framed this as a direct response to where the market is heading and what clients are asking for. “We are responding to market developments and client needs,” said Serge Kaulitz, Head of Blockchain & Digital Assets at the bank. He explained that digital assets have become widely recognized as highly liquid and therefore make sense as collateral in much the same way as equities or funds. While the volatility of crypto cannot be ignored, its ability to be converted into cash quickly means it has a real place in banking services that were previously closed to it.

By formally recognizing Bitcoin and Ethereum as suitable collateral, LUKB is signaling that cryptocurrencies are no longer viewed as fringe or speculative curiosities. This acceptance has also encouraged investors to think more broadly about the role of digital assets in their portfolios. Bitcoin and Ethereum are the most recognized cryptocurrencies, and for many investors, they are the entry point into the digital asset space. Yet, the logic of treating crypto as a serious asset class naturally raises the question of what other projects could eventually reach the same level of adoption or value. Some investors, for instance, are wondering which crypto will reach $1,000, an idea that captures the search for new opportunities outside the most established projects. That curiosity is now shaping how many people approach new opportunities in the sector.

A Long Preparation Behind the Announcement

Although it may sound like a sudden move, the bank has been involved in the world of digital finance for nearly a decade. As early as 2016, LUKB was experimenting with blockchain applications, though it waited until 2024 to begin offering direct custody and sales of major cryptocurrencies. That decision proved to be well-timed. Within just a few months of launching, around 1,000 clients had taken advantage of the service, collectively holding about 40 million Swiss francs in digital assets. These figures, disclosed in the 2024 annual report, underscored not just interest but trust in the bank’s ability to manage crypto responsibly.

Diversification Matters for Banks Too

Like many financial institutions, LUKB is aware that traditional lending margins are being squeezed by declining interest rates. This makes non-interest revenue increasingly important, and digital services provide exactly that. By offering trading, custody, and now crypto-backed lending, the bank is building income streams that are not tied directly to the interest environment. At the same time, it gives clients reasons to remain within the LUKB ecosystem instead of going to specialized crypto platforms. Kaulitz has stressed that this strategy fits into a wider effort to modernize the institution’s digital services, aligning them with how people actually manage their wealth today.

Why Collateralizing Crypto is Logical

The idea of using cryptocurrencies as loan collateral may sound risky to some, but from a banking perspective, it is fairly straightforward. Assets like Bitcoin and Ethereum trade with high liquidity on global markets, so they can be sold rapidly if a borrower defaults. That makes them much easier to work with than assets that take weeks or months to liquidate. For customers, this provides a way to access credit while holding onto their crypto positions, which can be important for long-term investors who believe strongly in the asset’s future and would rather not sell at a particular moment in time.

Bringing Caution and Trust Together

One of the strongest advantages LUKB brings to the table is the trust factor. While plenty of unregulated platforms allow investors to borrow against digital assets, many clients are uneasy about leaving large sums with companies that lack a long record or strong oversight. By offering this service as a regulated Swiss universal bank, LUKB removes that layer of uncertainty. The fact that it is a state-backed institution adds another layer of assurance. Investors who want exposure to digital finance but also value security now have a way to do both without compromising either priority.

Could Other Banks Follow?

When one institution takes a bold step, others often wait and see how the market responds, and LUKB’s decision is likely to be watched closely across Europe. If customer adoption is strong and the loan program operates smoothly, more banks may decide to accept crypto as collateral themselves. That could accelerate the normalization of digital assets within mainstream finance. The question will be how quickly others feel comfortable following LUKB’s lead, since they will need to balance customer demand with risk management and the ongoing evolution of regulations that govern these types of services.

Laying Groundwork for the Next Phase

What LUKB is doing now is likely just the start of a longer process. Accepting Bitcoin and Ethereum as collateral introduces digital assets into everyday banking in a tangible way, but it also opens the door for further integration down the line. 

With regulatory frameworks improving and blockchain applications expanding, it is easy to see how tokenized securities, blockchain-based payments, or even new classes of digital financial products could eventually appear in offerings from banks like LUKB. For now, though, allowing crypto-backed loans stands out as an important milestone for both the institution and Swiss finance more broadly.

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