Swiss Stock Exchange Building Its Own Fully Regulated Crypto Exchange Using DLT

Siamak Masnavi

On Friday (6 July 2018), the Swiss stock exchange, owned and managed by SIX, announced that it is using Distributed Ledger Technology (DLT) to build "a fully integrated trading, settlement and custody infrastructure for digital assets" called SIX Digital Exchange (SDX) that will be fully regulated (by both the Swiss Financial Market Supervisory Authority, FINMA, and the Swiss National Bank, SNB). 

SDX will provide a "a safe environment for issuing and trading digital assets, and enable the tokenization of existing securities and non-bankable assets to make previously untradeable assets tradeable", and will be launched in mid 2019.

Thomas Zeeb, Head of Securities & Exchanges, at SIX said:

"The digital space currently faces a number of key challenges. These include the absence of regulation that ensures official safety, security, stability, transparency and accountability – all of which contribute to a lack of trust. The challenge is less in the trading of assets but rather in the custody and asset servicing, including asset safety. Do you adopt a model with many sub-custodians, including inefficient interfaces and with inherent risks, or do you go with a recognised and regulated infrastructure provider who provides all steps of the chain in an integrated and secure model? We believe that the latter has significant value. As the stock exchange infrastructure for Switzerland, we know what it takes to build and run mission-critical and scalable, systemically important services."

The CEO of SIX, Jos Dijsselhof, had this to say:

“This is the beginning of a new era for capital markets infrastructures. For us it is abundantly clear that much of what is going on in the digital space is here to stay and will define the future of our industry. The financial industry now needs to bridge the gap between traditional financial services and digital communities. This is the role that we at SIX can play. SIX is in a unique position in that it runs the entire securities and payments value chain for Switzerland already, and is ideally positioned to create the digital ecosystem for the future, allowing existing and new market participants to develop their business models for the opportunities available in this new environment. These are strengths that we can bring to the digital space and contribute meaningfully to what is one of the most innovative and dynamic environments of our time.”

This move by SIX is a positive development for

  • Banks (since SDX will "put banks at the heart of transactions in the digital space and offer them a solid foundation to pursue their business strategies for digital and tokenized assets");
  • Investors (since SIX being "a recognised and regulated infrastructure provider" brings to the market the "security and trust" that investors in digital assets are looking for); and
  • Entrepreneurs (because SDX will provide "a stable, fair, trustworthy and reliable environment, providing a bridge from the traditional to the new world").


Featured Image Credit: Photo by "Dennis Jarvis" via Flickr; licensed under "CC BY 2.0"

Toronto Stock Exchange Lists $14 Million Bitcoin Fund

The Toronto Stock Exchange (TSX) has listed a $14 million closed-end fund that gives investors exposure to bitcoin

According to a press release, Canadian investment manager 3iQ has launched The Bitcoin Fund, for  which it received the green light to in October 2019, on the TSX this Thursday, April 9. The fund works as an exchange-traded product (ETP) as it gives investors exposure to its underlying asset.

The Bitcoin Fund (ticker: QBTC.u), as the name suggests, tracks the price of bitcoin (BTC) using a feed co-developed by MV Index Solutions (MVIS) and leading cryptoassets data provider CryptoCompare. It tracks the price of the cryptocurrency using the MVIS CryptoCompare Institutional Bitcoin Index, a rules-based index meant to rack BTC’s performance on selected crypto exchanges.

These exchanges include top names like Binance, Bitstamp, Coinbase, Bitflyer, Gemini, itBit, and Kraken. Quynh Tran-Thanh, Chief Product Officer at CryptoCompare, said:

We are delighted to see our Institutional Bitcoin Index used as the underlying index for The Bitcoin Fund. We believe that our robust Digital Asset Indices will continue to service the growing demand for regulated digital asset investment products.

As other ETPs, its attractive for investors who either can’t or don’t want to buy the underlying asset, but still want to add exposure to it to their portfolios. When it comes to bitcoin and other cryptocurrencies, managing private keys can be rather hard.

Traditional investors may also use the fund to become more familiar with the asset class. 3iQ reportedly sent three year working with the Ontario Securities Commission’s Investment Funds and Structured Products Branch to create The Bitcoin Fund.

In the press release Thomas Kettner, Managing Director at MV Index Solutions noted that the fund will “help to strengthen the status of digital assets as an asset class.” It’s worth onting the Toronto Stock Exchange has listed cryptocurrency-related companies, including BTC minig group Hut8 and crypto merchant bank Galaxy Digital.

Featured image via Pixabay.