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The blockchain is set to challenge the dominance of national exchanges. Keystone / Walter Bieri
Digital asset bank Sygnum says it will open up new sources of finance for small businesses by creating and trading stocks on the blockchain. Its new commercial structure will also address the venture capital, real estate and arts and collectibles markets.
This content was published on Nov 26, 2020 – 09:20
swissinfo.ch
The goal is to translate traditional assets into blockchain-compatible digital “tokens” that can accelerate trading and make participation in financial markets more accessible. These trading venues offer an alternative to established stock exchanges.
On Thursday, Sygnum unveiled its “Desygnate” token issuing service and “SygnEx” exchange. Sygnum’s virtual currency DCHF, backed by the Swiss franc, will be used for immediate payments on trades.
The bank attracted major Italian asset management companies Azimut Group and the Japanese venture capital group SBI Ven Capital as initial clients. The fine wine capital of Switzerland, which invests in collectible wines, and real estate investor ImmoZins are among other clients who intend to issue and exchange tokens on the platform.
Swiss electric car maker BAK Motors will also use the platform to raise funds to finance projects.
Azimut aims to leverage blockchain to help small and medium-sized businesses raise money for growth. Sygnum believes that tokenization will solve “many of the challenges that 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, Swiss stock exchange operator SIX Group calculated that under traditional processes, financial intermediaries could charge up to CHF 500,000 ($ 551,120) for every CHF 100 million of debt issued by companies on the financial markets.
The Swiss financial regulator granted Sygnum a license in September to operate its blockchain trading facility. Other projects in Switzerland, including Lykke, the digital exchange firm SDX proposed by SIX Group, and the blockchain financial services firm, are queued for the licensing to work.
Swiss lawmakers recently approved a wide-ranging update of the country’s financial and corporate laws to incorporate blockchain and a new generation of digital assets.
Other major stock exchanges around the world are exploring ways to integrate blockchain. And recently leaked documents suggested that Singapore’s DBS bank is also planning a digital asset trading platform.
It has long been possible to issue blockchain-compatible assets. Examples include Lykke’s tokenized shares and the nascent blockchain bank Mt Pelerin. Earlier this year, Brickmark converted a building on Zurich’s exclusive Bahnhofstrasse into a blockchain-based investment.
But financial innovation has been slowed by regulatory demands and hampered by the lack of reliable trading venues. Sygnum co-founder Mathias Imbach hopes the much-publicized fusion of traditional finance and blockchain will finally become a reality.
“After a lot of industry talk, all the pieces are finally coming together to truly unleash the true potential of tokenization,” he told swissinfo.ch. “The key is to incorporate it into the regulated banking system, which takes care of the legal and operational processes for issuers and investors.”
