Blockchain trading venue challenges stock exchange dominance

by
Matthew Allen
My articles My siteAbout meMy booksMy videos
Follow on:

Blockchain is set to challenge the dominance of national stock exchanges. Keystone / Walter Bieri

Digital assets bank Sygnum says it will open up new sources of funding for small companies by creating and trading shares on the blockchain. Its new trading facility will also target venture capital, real estate and the arts and collectibles market.

The goal is to translate traditional assets into blockchain-compatible digital ‘tokens’ that can speed up trading and make it more affordable to participate in the financial markets. Such trading venues offer an alternative to established stock exchanges.

On Thursday, Sygnum unveiled its ‘Desygnate’ token issuance service and the ‘SygnEx’ trading exchange. Sygnum’s virtual DCHF currency, backed by the Swiss franc, will be employed for instant payments on trades.

The bank has attracted sizeable Italian asset management company Azimut Group and Japanese venture capital group SBI Ven Capital as initial clients. Switzerland’s Fine Wine Capital, which invests in collectible wines, and property investor ImmoZins are among the other clients that plan to issue and trade tokens on the platform.

Swiss electric car manufacturer BAK Motors will also use the platform to raise money to fund projects.

Azimut aims to leverage blockchain to help small and medium sized enterprises raise funds for growth. Sygnum believes tokenisation will solve “many of the challenges start-ups and SMEs face when raising capital in traditional capital markets: high costs, extensive listing requirements, and resource-intensive processes.”

In a 2019 report, the Swiss stock exchange operator SIX Group calculated that under traditional processes, financial intermediaries could charge up to CHF500,000 ($551,120) for every CHF100 million of debt that companies issue in the financial markets.

The Swiss financial regulator granted Sygnum a license in September to run its blockchain trading facility. Other projects in Switzerland, including SIX Group’s proposed SDX digital exchange and blockchain financial services company Lykke, are queuing up for licenses to operate.

Swiss lawmakers recently passed a wide-ranging upgrade of the country’s financial and corporate laws to incorporate blockchain and a new breed of digital assets.

Other major stock exchanges around the world are exploring ways to integrate blockchain. And leaked documents recently hinted that Singapore’s DBS bank is also planning a digital assets trading platform.

It has been possible for some time to issue blockchain compatible assets. Examples include tokenised shares by Lykke and budding blockchain bank Mt Pelerin. Earlier this year, Brickmark converted a building on Zurich’s exclusive Bahnhofstrasse into a blockchain-powered investment.

But the financial innovation has been slowed by regulatory demands and hindered by a lack of reliable trading venues. Sygnum’s co-founder, Mathias Imbach, hopes the much-hyped merger of traditional and blockchain finance will finally become reality.

“After a lot of talk by the industry, all the pieces are finally coming together to truly unleash the true potential of tokenisation,” he told swissinfo.ch. “The key is to embed it into the regulated banking system, which takes care of the legal and operational processes for issuers and investors.”

You Might Also Like

Swiss law reforms make crypto respectable

Bitcoin used to be something of a dirty word, associated with crime and money laundering. Switzerland has now amended its legal code to welcome cryptocurrencies and blockchain technology into the mainstream.

Julius Baer to offer private equity to ultra-wealthy clients

Julius Baer has poached a senior executive from rival Swiss wealth manager UBS to set up a new division offering private equity and debt investments to its ultra-wealthy clients. The move illustrates how a prolonged period of low interest rates has forced the likes of UBS and Credit Suisse to prioritise offering illiquid private investments to their super-rich clients, who agree to forgo access to their capital in the hope of achieving higher returns.

Swiss International Air Lines’ turnover halved due to coronavirus

The economic repercussions of the coronavirus have caused turnover at SWISS to fall by 55% in the first half of 2020. With a turnover of CHF1.17 billion ($1.28 billion) between January and the end of June, the carrier suffered an operating loss of CHF266.4 million in the first half of the year, following an operating profit of CHF245.3 million a year earlier.

How I built my own Swiss watch – in a day

Imagine assembling your own Swiss mechanical watch and taking it home with you at the end of the day. swissinfo.ch tried out the popular new concept run by Jura start-up Initium.

High gold prices spur more illegal mining in Peru

The boom in gold prices during the Covid-19 pandemic has kept Swiss refineries in business but has also boosted illegal mining, imperiling lives and the environment.

Crypto Nation Switzerland evades Covid’s clutches (for now)

The Swiss blockchain industry appears to be in rude health despite the economic fallout of the coronavirus pandemic. The number of new companies and jobs produced by the sector increased in the first six months of the year. Is this trend set to last?

Swiss regulator censures Bank Syz over money laundering

The Swiss financial market regulator FINMA has reprimanded Bank Syz for breaching money laundering rules involving a business relationship with an Angolan client.

Roche poised to launch mass Covid testing

Swiss drug firm Roche says it is to launch a new Covid-19 antigen test before the end of the year, allowing faster, higher-volume testing. One of the most potent use cases could be at airports to ease the severe restrictions on air transport.