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"

Ebang's Hong Kong IPO Application Expires

Neil Dennis

Ebang, China leading maker of bitcoin mining gear, has allowed its application for an initial public offering (IPO) in Hong Kong to lapse on Friday.

The Hangzhou-based company which makes the Ebit miner never disclosed exactly how much it hoped to raise and is now the last of the big-three cryptocurrency mining giants to have passed up on listing shares in Hong Kong.

Market leader Bitmain's IPO application lapsed on March 25, while Canaan allowed its application to expire in November 2018.

Ebang first tried to take its shares public on the Hong Kong exchange on June 24, 2018, but updated its application the following December. IPO applications to list on the Hong Kong Exchange are only valid for six months.

While investors on cryptocurrency exchanges have had to come to terms with high levels of price volatility in crypto-assets, the Hong Kong stock exchange HKEX has reportedly been reluctant to list shares in associated companies.

HKEX feels that excessive moves on cryptocurrency exchanges could cause similar behaviour for associated stocks on its exchange.

Citing a source involved in talks over Canaan's listing, Coinbase reported the exchange was nervous about listing such companies.

Coinbase's source said:

The exchange is very hesitant to actually approve these bitcoin mining companies because the industry is so volatile. There’s a real risk that they could just not exist anymore in a year or two. The HKEX doesn’t want to be the first exchange in the world to approve this and have one die on them.

New York Filing?

The question now turns, however, to: will New York jump in where Hong Kong fears to tread?

As Ebang's Hong Kong IPO lapsed on Friday, news was breaking across the Pacific that Bitmain - which was valued at $15 billion in a private funding round last year - was consulting with advisers about a US stock listing. 

When its Hong Kong application lapsed it was hoping to raise up to US$3 billion. Insiders known to Bloomberg believe Bitmain will file for an IPO on tne New York Stock Exchange in the second half of 2019.