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"

Binance Loses 7000 BTC in Hack; WeChat Bans Crypto Trading; Milestone for Ethereum 2.0 as Testnet Launched

The crypto industry has grown accustomed to seeing Binance dominate headlines, and today was no different. What was, however, was the contents of the news itself. Indeed, for the first time in its near-two-year-long existence, the world’s largest cryptocurrency exchange was hacked for 7,000 BTC.

Believe it or not, other significant news stories broke today. Among them, reports that Chinese messaging giant WeChat has updated its payment policy to state that users engaging in crypto trading will be banned. More positively, Prysmatic Labs released the first staking-enabled testnet for Ethereum 2.0.

In the markets, bitcoin (BTC) retraced 1.81% for the day to $5,887.04. As for ether (ETH), it slumped 5.32% to $170.06. The MVIS CryptoCompare Digital Assets 10 Index also fell 0.65% to 2,854.90 as at time of writing.

Cryptocurrency market update

Binance Loses $40.7 Million Worth of Bitcoin

Top-tier cryptocurrency exchange Binance reported a hack totalling 7,000 bitcoin (≈$40.7 million) was discovered late-afternoon on May 7. In an official statement, Binance co-founder and chief executive Changpeng ‘CZ’ Zhao said “one transaction” was all that was used by the hackers, who were able to obtain large volumes of user information including API keys and two-factor authentication codes. In order to compromise user accounts, the hackers “used a variety of techniques, including phishing [and] viruses,” the statement pointed out. To fully cover the loss, Binance will use its Secure Asset Fund for Users, a BNB-denominated fund that holds 10 percent of all trading fees absorbed by the exchange. CZ discussed the idea of re-organizing the bitcoin blockchain to undo the hacked transactions, which caused some controversy amongst the community.

Cryptocurrency Transactions Banned by WeChat

Popular Chinese social media platform, WeChat, reportedly announced it will terminate any user accounts involved in cryptocurrency trading. Per sources familiar with the matter, WeChat’s management has revised its payments policy to read “merchants may not engage in illegal transaction such as [those involving] virtual currencies.” The updated policy will come into effect at the end of this month. Ever since China outlawed cryptocurrency exchanges in 2017, messaging apps like WeChat have emerged as popular solutions for prospective cryptocurrency buyers and sellers looking to perform over-the-counter trades.

Prysmatic Labs Releases Ethereum 2.0 Phase 0 Testnet

Ethereum scaling solution developer Prysmatic Labs launched its Ethereum 2.0 testnet. The release marks the first staking-enabled testnet for Ethereum 2.0; a major development milestone, to be sure. In a blog post accompanying today’s release, Prysmatic Labs’ co-founder and team lead Preston Van Loon shared the “next step is to launch v0.6 of the official Ethereum 2.0 specification into [its] testnet.” This, he added, promises to be “a massive improvement, as the research team aims to freeze the spec by June and have something that will represent a more polished version for mainnet release.”