Swiss Stock Exchange Bringing Crypto to the Center of the Global Financial Industry
Six Digital Exchange (SDX), the new crypto exchange from Switzerland’s principal stock exchange SIX, plans to offer end-to-end trading, settlement and custody service for digital assets when it rolls out in mid-2019.
In November, Thomas Zeeb, head of securities and exchanges at SIX, told Reuters that the new exchange will initially run parallel to the existing exchange but that he expects the existing system to be “completely replaced by the digital exchange in about 10 years.”
In a recent interview posted by SIX, Zeeb emphasizes the far-reaching potential of SDX and how he believes it will transform the industry.
Here are highlights from the interview.
Anything Can Be Tokenized
“There are almost no limitations to the types of assets that can be tokenized. The realm of conceivable tokenized assets includes digital currencies and securities, and perhaps someday even non-bankable assets such as paintings and real estate.
A token can be almost infinitely fractionalized. I could then, for instance, get a fraction of a share – 0.00173 Nestlé, for example. Cryptocurrencies have already made us familiar with this principle. Imagine the services that banks could offer their clients in the future. Tokenization will give all assets a new digital quality. They will become intelligent in a way because we’ll be able to do almost anything with them via smart contracts.”
SDX Will Offer Digital ICOs
“SDX will offer digital IPOs. What we’re striving for is a white ICO. Starting in spring of next year [spring of 2019], we will meet with banks and the Swiss regulator FINMA to swap ideas on how ICO services from our side might look. We need to define standards, perhaps not as high as those for a traditional IPO, but not much lower either.”
Regulation Still Needs Improvement
“But whether or when we start to use the respective technology depends on a number of different factors including a regulatory infrastructure that exploits the potential of digitalization. The lack of such a regulatory infrastructure, of course, is exactly why cryptocurrencies don’t always enjoy the best reputation and why ICOs have come under fire on occasion. It’s a serious issue because there are currently no controls in place. All the more important is a transparent, straightforward process. In the future we must be able, for instance, to verify that the actual asset underlying the digital asset is not of criminal origin.”
“The regulations are just starting to take shape, which is an advantage for us. Part of the regulatory regime will probably develop continuously with the buildup of SDX. Our ICO services, for example, will set a precedent. Given the experience and status of SIX as an operator in a regulated environment, we are working closely with FINMA to define the needs for the future.”
Regulation Will Bring Institutional Investors
“If we can do that (introduce regulatory infrastructure), institutional investors, for example, will be among the first to want to take advantage of such offerings. The same goes for ICOs, which currently proceed in a decentralized and unregulated manner, and thus give rise to a large number of fraud cases.”
SDX Will Combine the Speed of Technology With the Regulation of a Stock Exchange
“Millions of francs that are tied up today as collateral will be freed as we execute a genuine, instant, transfer of title to a property. Distributed ledger technology makes that possible. In other words, we’re building the world’s first end-to-end trading, settlement, and custody platform for tokenized assets that will operate in a regulated environment.”
Switzerland on Track to Become a Leader in the Digital Economy
“We are well-positioned to build the bridge between existing and new infrastructure. We find ourselves presented with a tremendous first-mover opportunity to capitalize on, and further strengthen, the brand value of SIX as well as Switzerland’s brand value. SDX has the potential to position Switzerland at the center of the global financial industry’s digital future.”
Following new crypto platforms from Bakkt, Fidelity, CoinFLEX and Bison App from Börse Stuttgart, SIX is well positioned to bridge legacy infrastructure and traditional finance with the growing digital economy. Commanding an institutional track record and regulatory compliance, SIX plans to launch SDX as another major pillar that’s engineered for the long-term success of digital assets. As with all crypto trading platforms and related businesses, regulatory clarity is the key to advancing the new tech.
You can read the full interview here.