Category Archives: Switzerland

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Basel Committee Warns Against Bitcoin Threat to Global Banking

Basel Committee Warns Against Bitcoin Threat to Global Banking

The Basel Committee on Banking Supervision (BCBS) has warned that the growth of cryptocurrencies presents a risk for banking institutions.

The BCBS is a committee of banking supervisory authorities that was established by the central bank governors of the Group of Ten countries in 1974. It provides a forum for regular cooperation on banking supervisory matters. BCBS has its own governance arrangements, reporting lines and agendas, guided by the central bank governors of the Group of Ten countries.

The fact that a recent BCBS forum has highlighted crypto assets will come of little surprise to the cryptocurrency industry. It has long been accepted that banks are the most reluctant institutions to accept the rise in popularity of digital money. The threat to the dominance of banks as the traditional provider of financial services around the world, despite two-thirds of the planet being unbanked, is a considered argument. The recent BCBS newsletter argued:

“While the crypto-asset market remains small relative to that of the global financial system, and banks currently have [minimal] direct exposures, the committee is of the view that the continued growth of crypto-asset trading platforms and new [commercial] products related to crypto-assets has the potential to raise financial stability concerns and increase risks faced by banks.”

The committee has said that it will continue to monitor movements in the cryptocurrency industry with a view to offering banking systems protection from what they see is the higher risk posed by exposure to cryptocurrency. The main threat perceived by banks is the loss of dominance in financial markets as the world’s banks look to cheaper and more efficient ways of fulfilling their financial needs.

The devaluation of establishment money is a feasible outcome if cryptocurrency were to become any kind of threat to the established US dollar; a somewhat unlikely outcome at this stage, but if cryptocurrency were to become completely mainstream then there would begin to be real concerns amongst some of the world’s major banking institutions.

 

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Blockchain Could Be Set for $462 Billion Finance Industry Stake by 2030

Blockchain Could Be Set for 2 Billion Finance Industry Stake by 2030

London-based global information provider IHS Markit have estimated that the finance industry blockchain market is set to reach USD 462 billion by 2030.

The value of blockchain in the financial sector reached USD 1.9 billion in 2017, according to IHS Markit’s figures but this total is set to swell significantly given the expected launch of numerous projects over the next few years. The London info provider’s chief analyst Don Tait sees his 2030 projections as entirely feasible, adding, that a positive international regulatory stance will impact the industry over time:

“The Securities and Exchange Commission in the United States, the Financial Conduct Authority in the UK, the Hong Kong Monetary Authority and other regulatory bodies are reacting positively towards blockchain technology within the financial sector.”

IHS Markit indicated many ways in which the blockchain industry will be called upon in the years ahead, including cross-border payments, share trading, and syndicated lending. Tait sees the global financial market as becoming the technology’s most prominent user, including insurance and fintech. He cites the derivatives market, currently worth around USD 544 trillion a year, as having huge blockchain potential, commenting:

“By applying blockchain to the clearing and settlement of cash securities – specifically, equities – investment companies could save up to USD 12 billion in fees.”

The possible applications for blockchain technology have not gone unnoticed by stock exchanges either, with recent with Switzerland’s SIX exchange and Germany’s Deutsche Börse either actively, or at the stage of, integrating blockchain technology into current systems.

 

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Credit Suisse Successfully Tests Blockchain for Cross-Border Payments

Investment Bank Credit Suisse Successfully Tests Blockchain for Cross-Border Payments

Swiss multinational investment bank and financial service company Credit Suisse confirmed today that its asset management arm which manages over USD 400 billion has successfully tested a blockchain-based cross-border transaction, as reported by Reuters.

According to the post, parties involved in the test — Portugal’s online bank Banco Best and Luxembourg-based order-routing platform Fundsquare — confirmed that a blockchain-based platform was used “to process an unspecified number of trades”.

The attestation stated that the test showed cross-border payment processing which was distributed over the blockchain and is more efficient, scalable and timely in processing.

According to the source, “the investment fund industry relies heavily on transactions and settlements that are often complex and time-consuming to process”, hence the need for a transition to a more secure and fast system to scale up processes.

As it stands, blockchain much-cited edge as a distributed immutable ledger becomes the preferred choice under the circumstances. The post also notes that because of the quality of the blockchain, fewer checks are needed to ensure entries are secure, which in turns saves time.

While the test was successful, the parent company made no comments on whether future applications of the technology will be expanded.

For banks and many financial institutions, optimizing cross border payment processes through blockchain is increasingly becoming an important use case of the blockchain.

Last December, UK fund processor Calastone said it could save up USD 4.3 billion using blockchain and would be moving its operations by May this year.

Recently, major Swiss exchange SIX said it was ready to launch its SDX trading platform using blockchain.

Saudi and UAE have reportedly been collaborating to develop a cross border payment system basically designed for bank-to-bank transactions only through the blockchain, and currently, have a select few commercial banks participating.

 

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Swiss Stock Exchange to Integrate Blockchain Technology

Switzerland

SIX Swiss Exchange has decided to use blockchain technology for its upcoming parallel digital trading platform SDX. Switzerland’s leading stock exchange is expecting the integration to happen in the first six months of 2019, media reports claimed.

Approximately CHF 5.19 billion (Swiss francs equivalent of USD 5.18 billion) is processed by SIX Swiss Exchange in daily turnover. Moreover, it has a market capitalization of CHF 1.67 trillion (USD 1.6 trillion).

CEO Jos Dijsselhof stated that improved security and time efficiency that blockchain can offer in stock trading and settlement is the main reason for the company to develop this technology.

He added that in the present system, trades only take a few seconds but it usually takes two days for the buyer to become the owner of the stock. He hoped that by integrating the blockchain technology, the whole process would take only a few seconds. Along with improved efficiency, it should make the process more secure as well. He predicted that a blockchain-powered stock exchange would widen the range of tradable titles.

Romeo Lacher, SIX exchange chairman, told Reuters that the launch date of the new platform would be announced after legal and regulatory clarification with the Financial Market Supervisory Authority, adding that the announcement was expected by the end of summer.

The company expects that its SDX digital exchange will supersede its current market place by 2029, noted Reuters. SIX is also aiming at launching its own security token offering, allowing investors to have an equity stake in exchange for capital.

However, SIX is not the only exchange looking to integrate blockchain technology. The Deutsche Börse also said that it has made significant progress on its securities lending platform, which will be based on blockchain technology.

 

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VC Investments Push Swiss Startups to $1.25 Billion Record

VC Investments Push Swiss Startups to .25 Billion Record

This year’s Swiss Venture Capital Report has revealed that Swiss startups are increasingly attracting venture capital investment, with 2018 breaking all records.

The latest report, released by news outlet Startupticker.ch and the Swiss Private Equity and Corporate Finance Association (SECA), points to cryptocurrency companies as being at the forefront of attracting VC investment with Swiss startups receiving almost CHF 1.24 billion (Swiss francs equivalent of USD 1.25 billion) of venture capital during 2018. Much of the investment was aimed at Zug, Switzerland’s appropriately-named Crypto Valley. The figures represent an increase of 32% from 2017 with financing rounds increasing by over 31%. The figures cover venture capital investments of at least CHF 100,000.

The spike in investment has been put down to increased interest in both the ITC and fintech sectors, with new funding for the former almost doubling the previous year’s figures. In 2018, 131 Swiss ICT start-ups amassed CHF 685 million from investors, 55% of the total invested capital, which included the cryptocurrency sector raising 15%, almost CHF 188 million.

The largest amount raised last year was in the crypto sector, with CHF 100 million raised by the Zug-based SEBA Crypto, whose main focus is on combining crypto and traditional banking services. The report found that the geographical distribution of VC investment was clearly Zurich-centered with a significant increase on last years figures. However, Zug, home to some of the world’s leading cryptocurrency companies, and many of Switzerland’s major players, experienced a 143% VC funds increase year-on-year.

Conclusions drawn from the report indicate that with the hype now gone, and with Switzerland now acknowledged a crypto-friendly space, the local cryptocurrency scene is entering a “period of normalization and professionalization”, backed by the government in Bern, which has recently adopted a comprehensive strategy for the development of cryptocurrency in the alpine nation.

 

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Mixed Bitcoin Messages From Davos World Economic Forum

Bitcoin was the talk of the town in Switzerland last year when the world’s movers and shakers assembled at Davos for the 2018 World Economic Forum, but this year the cryptocurrency demands a far less prominent position at the table.

The comparison is startlingly obvious. From getting a fair degree of attention a year ago at the 2018 Conference, albeit on the way down even then, the cryptocurrencies are less liable to attract the attention of delegates this year, particularly given the current trials of leaders from the US, UK, and France all entangled in their own domestic issues, some of them shared.

Angel Versetti, CEO of blockchain-based company Ambrosus observed: “While last year, people were talking about crypto and blockchain anywhere and everywhere, this year there is comparatively little discussion around it.”

Hardly surprising given Trump’s domestic battle and government shutdown, May’s Brexit squabbles and Macrons’ sea of yellow vests. The subject still comes up though, some fairly hopeful of a market revival, some less, like the advisor to the Bank of England, Huw van Steenis who said that cryptocurrencies weren’t on the list of priorities at this year’s summit, “I’m not so worried about cryptocurrencies,” he commented not unexpectedly, “They fail the basic tests of financial services, they’re not a great unit of exchange, they don’t hold value and they’re slower.”

Not the case at all, according to Jeremy Allaire — CEO of Circle, the Goldman Sachs-backed payments and tech company as he argues that fintech will be dependent on decentralized technology moving forward:

“Crypto is fundamental to the future, and so crypto computing, which is what these blockchain platforms really are, they’re open computing platforms — we need tamper-proof, resilient, decentralized infrastructure if we want society to survive the digital age.”

Allaire went on to argue that Circle was also a huge supporter of central-bank digital currencies, suggesting that the private sector will be the leader in setting the pace for the creation of these centralized crypto assets. However, Jeff Schumacher, founder of BCG Digital Ventures was less optimistic during a CNBC panel discussion as he mentioned, “I do believe it [cryptocurrency] will go to zero,” adding, “I think it’s a great technology, but I don’t believe it’s a currency. It’s not based on anything.”

Next year could be an embarrassment for some of these commentators if Bitcoin hits its expected heights this year as Wall Street comes on board.

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Swiss Point to Stablecoins as Next Crypto Innovation

Swiss Point to Stablecoins as Next Crypto Innovation

A computer scientist and economist who co-founded the Bitcoin Association Switzerland, Luzius Meisser, has spoken out about the direction of the cryptocurrency industry, pointing to stablecoins as the next big mover.

Meisser, who is also on the board at brokerage firm Bitcoin Suisse AG, was speaking at the Crypto Finance Conference in St Moritz on 16 January when he said that stablecoins and security tokens would have a significant effect on the ICO market moving forward.

Suggesting that up to now, ICO investors had been little more than donors with very few rights, the impetus is now shifting to consumer protection and that “payment and utility tokens are more or less over”. The direction for the future would be more likely to point toward stablecoins, which are legally considered to be payment or utility tokens rather than securities. Meisser commented:

“Stablecoins are a precondition to enable average companies to bring their equity onto the blockchain, because if they issue bonds or shares they want to do so against US dollars, euros or Swiss francs, because those are the currencies they calculate in, not Bitcoin (BTC) or Ethereum (ETH).”

Meisser reminded the conference that Swiss banks had been reticent towards cryptocurrencies, but clarified some of the alternatives available to the Swiss cryptocurrency community for circumventing the banks. The stablecoin alternative, however, is an ongoing debate globally with both its advocates and its detractors.

Since the Royal Mint in the UK canceled its stablecoin project after a US-based exchange group withdrew their support before the digital token launch last year, questions are continuing to be asked about the lack of institutional support for such projects.

One major concern is that stablecoins generally require the participation of traditional institutions, many of which are not fully convinced by the argument for digital currencies linked to traditional assets, and may be far more prone to withdrawing from token projects without warning as a result.

 

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Swiss Bank Vontobel Launches Digital Asset Custody Vault

Swiss Private Bank Vontobel Launches Compliant Digital Asset Custody Vault Solution

Switzerland-based investment bank Vontobel announced today that it is launching a custody solution with a digital asset vault service for its customers.

Per the announcement, this will allow financial intermediaries such as banks and asset managers to offer their customers a more secure and easy way to buy, hold and transfer their digital assets, within an unprecedented infrastructural standard. The product features Hardware Security Module (HSM) technology embedded in the bank’s infrastructure.

One of the largest financial custody providers in Switzerland, the bank touts the new Digital Asset Vault business solution as the first in the world offering “industry-standard quality standards within the established and regulated environment”. Some of the perks include granting owners of the digital asset direct access to holdings with exclusive privilege to their private keys.

Custody solutions are currently being explored by many financial institutions, where an emerging client base built on the economy of digital assets will have a flexible channel to securely manage their holdings. Head of Vontobel Investment Banking Roger Studer said, “Digital Asset Vault is a logical evolution.”

Choi Kyung-pil, Director of the Center for Future Finance Research at the Korea Institute of Finance has also said that “traditional assets are in danger too, and the custody market is in place”.

With the expected influx of institutional investments, the need for such integrated services becomes ever necessary, with security being the most essential requisite.

Other key figures in the crypto industry such as Coinbase and BitGo have also ventured into the custodial business, aiming at servicing sophisticated investors.

Switzerland continues to shape its blockchain and digital asset industry to become one of the most conducive environments for its development. Its most recent activity includes adapting its existing laws to accommodate blockchain. Moreover, newly-elected president Ueli Maurer, who has been supportive of the development of the industry while being finance minister, has filled crypto adopters in the country with hopes of more positive outcomes.

 

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Crypto Community Happy with Switzerland’s New Industry Friendly President

Switzerland has a new rotating president as its former finance minister Ueli Maurer takes over the helm after overseeing the country’s financial sector for 3 years.

The move is seen as a positive one in the eyes of Switzerland’s burgeoning cryptocurrency community, as Maurer had been at the helm of numerous positive developments in the crypto arena during his role as a finance minister.

As finance minister, Maurer has helped his country’s financial sector adapt to the changing face of the finance, particularly in its adoption of regulations overseeing the cryptocurrency sector; industry-friendly regulations which are much admired by many nations around the world who are also in the process of regulating new financial technologies.

The government’s liberal blockchain regulations are one of the reasons that Switzerland has become a world-class playground for start-ups and successful blockchain enterprises. The Alpine nation’s latest announcement regarding DLT and its increasingly prevalent place in the country’s financial sector is a new strategy for amending current outmoded laws. The strategy also calls for the integration of cryptocurrencies into the heart of Switzerland’s economic plan.

A blockchain task force of blockchain industry stakeholders was formed last year when it became clear that emerging technologies were gaining traction within the Swiss financial economy.

Switzerland’s biggest hurdle, a factor which President Maurer has acknowledged in the past, remains the reluctance of Swiss banks to service cryptocurrency businesses and exchanges, an issue which is still causing concerns in the industry and one that has recently prompted companies to consider moving to more favorable jurisdictions for banking.

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Upwards and Onwards for South Korea’s Crypto Investors

Upwards and Onwards for South Korea's Crypto Investors

South Korea grows from strength to strength as 2019 approaches, closing a tumultuous year on cryptocurrency markets and heralding another year of optimism for the Asian powerhouse.

In many ways, it is countries such as South Korea and Switzerland who have struck the path in terms of how to attract blockchain investment in 2018. The government has led the way in South Korea and this year, significant projects have shown the world the country’s real intent to become the place investors and new startups head for.

In October, Seoul Mayor Park Won-soo launched the Block City Seoul City Plan which puts in place USD 100 million as a blockchain industry fund to cultivate blockchain projects including plans to invest USD 53 million in the Gaepo Digital Innovation Park and Mapo Venture Center. Two local districts are also due to be constructed to support 200 high-quality blockchain projects train local industry experts.

The next major event in the capital Seoul is the CHAIN PLUS+ 2019 blockchain summit on 23 and 24 January where Major Park will be the keynote speaker.

The plan to build the two new blockchain incubation centers is designed to pull in even more business and expand the fintech job market in South Korea. Chainers Inc, a blockchain business development and advisory service in South Korea, will examine, review and recommend prospective blockchain projects, closely collaborating with related departments in government.

Also, South Korean Parliamentarian Park Joo-sun has set up a 16 representative committee of government members to look at further legislation for the industry which will have the power to suggest changes in national law.

 

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