The financial advisors of the banking entities of many countries have been listening to their clients the same request for months. They would like to invest in cryptocurrencies such as Bitcoin and Ethereum. Investors’ curiosity about cryptocurrencies is constantly increasing. the financial industry has to position itself on this and lose the train. The banking sector most accustomed to innovative products, investment banking, is beginning to explore new financial instruments and, of course, with the Swiss banking at the top.
In Switzerland, the first cryptocurrency real-time exchange regulated by Swiss banking legislation with a direct connection to retail banking and investment banking will be created under the name SCX (Swiss Crypto Exchange).
This initiative has been endowed with 2.5 million Swiss francs from the stock exchange. This information has been confirmed by the future Managing Director, Cyrill Tröndle. The platform will be available from November 5. The hand behind this initiative is a Swiss bank whose name has not yet been made public.
CRYPTOCURRENCIES CONNECTED TO THE BANKS
Behind the project is the Swiss Future Project, although it will soon change its name to Blockworks and go to Zurich: the company has rented offices in Dübendorf. The Managing Director is Cyrill Tröndle.
“Nowadays you have to send your money abroad if you trade in Switzerland in real time with cryptocurrencies, we want to change that,” says Cyrill Tröndle.
The basic idea of the project is to build a platform to which Swiss banks and their customers can join. “We want to unite the old and the new world,” says Tröndle. The so-called MVP was created, the first version of the software in operation. Tröndle is supported by the investment company Centurium and other investors, according to the newspaper “Sonntagszeitung”.
The Swiss cryptographic industry views SCX’s plans with good eyes but also points out the ambitious and risky nature of the company’s mission.
THE FIRST STEPS WITH BITCOIN AND ETHEREUM
In a first phase, which will start in a few weeks, SCX will offer services such as bitcoin and Ethereum brokerage exclusively. Registered customers can buy in SCX, Bitcoin, and Ether, and receive them immediately. The price is based on the prices of the international Bitstamp stock exchange. There is still no order book with purchase and sale orders. So SCX is doing the same as the other two Swiss brokers Bitcoin Suisse in Zug and Bity in Neuchâtel. “It’s kind of a soft release,” says Tröndle. This is intended to attract the first customers, not only to institutional investors but also to private clients. In this phase, the connection with the financial industry is not yet foreseen. Its integration will be later when this platform is consolidated, it will be tested in its entirety.
In the second phase, SCX must become an exchange platform with order books in real time. According to Tröndle, this phase should have already been reached in the first half of 2018. The focus is then the connection with the banks that will be the main contact with the customer.
THE ASSETS WILL BE ON THE BANKS
Initially, the client will maintain a normal account in the bank and will pay their francs for the purchase of cryptographic coins. For this amount, the customer can buy on SCX, for example, Bitcoin. The counterparties in the SCX trading platform also have an account in a Swiss bank, which allows monetary transactions to be made within the banking system.
SCX will take charge of the immediate execution of the orders. Depending on the orders of the clients, the balance of a bank will increase in Bitcoin and that of the client will increase in Swiss francs but the assets will not be in the SCX exchange at any time. “Customers just have to trust their bank, not us,” says Tröndle. Therefore, the concept includes that clients also have their cryptographic account in the bank.
The cryptocurrencies are integrated, in this second phase, with the banks or possibly specialized companies, on behalf of the banks. The corresponding solutions are in the process of being created and are expected to be available in the first half of 2018. Unlike current Bitcoin offers from Swiss banks, customers will be able to liquidate their bitcoins or ethereums, so they can be a wallet. private
For now, the focus of operations will be in Switzerland. However, the plan is to implement the same model with independent companies in other countries. These would need a license for the software. The long-term objective is to merge the trading orders of the respective countries in SCX, thus guaranteeing more liquidity.
SCX is in contact with the Financial Market Authority, FINMA, the highest authority on issues of financial product regulation in the Swiss country. However, there is still no official confirmation from the authorities. “We know all the facets of the law and regulations that can affect us,” says Tröndle. SCX will comply with all specifications. For some issues, regulations simply needed to be put on paper.
With this initiative, we see how the financial system (which had always been reluctant to recognize or include crypto actives in its portfolio) is adapting little by little to the immense growth that cryptocurrencies are experiencing.
Adapt or die.
Economy fan, hangued, hooked on crytocurrencies and junkie of audiovisual stuff…on rehab