Japanese financial services group SBI Holdings (SBIHD) has formed separate partnerships with the Swiss stock exchange and Sygnum bank. Both projects marry Swiss and Asian expertise in emerging financial technologies, such as blockchain-inspired crypto assets.

SBI Digital Asset, a subsidiary of SBIHD, recently announced a joint venture with the Swiss Digital Exchange (SDX) to create a digital assets trading platform in Singapore (https://www.swissinfo.ch/eng/swiss-digital-stock-exchange-branches-out-into-singapore/46210156). The Japanese group is also setting up an investment fund with Swiss digital assets bank Sygnum. The fund hopes to raise of up to $75 million (CHF67 million) and will focus on distributed ledger technology (DLT) infrastructure, decentralised finance and regtech in Europe and Asia.

SBIDH president Yoshitaka Kitao speaks to SWI swissinfo.ch about how Switzerland is a fertile breeding ground for disruptive financial innovation.

https://www.swissinfo.ch/eng/building-a-digital-assets-corridor-between-switzerland--japan-and-singapore/46283590

he adage “money begets money” is being given a twist in the world of decentralised finance. Here, people can make cryptocurrencies by creating cryptocurrencies. It’s a process called “staking” that promises eye watering interest rates – if you can stomach the inevitable risks that come with it.

Cryptocurrencies run on blockchains that rely on their users to validate the transactions that are carried out on them. Transaction validators are rewarded with a batch of freshly minted cryptocurrencies that happen to run on that blockchain.

Some blockchains (not bitcoin) require validators to stump up a “stake” of cryptocurrencies as a form of deposit. Lazy or malicious validators can be fined for sloppy service - or lose their deposit (stake) altogether if they prove to be bad actors.

Swiss crypto bank SEBA has revamped its board of directors amid reports of it running out of steam, just a year after being awarded a banking licence.

SEBA was launched in September 2018 with CHF100 million ($108 million) in starting capital and ambitious plans to bridge the worlds of traditional banking and digital assets. A year later, it won a banking licence, along with rival enterprise Sygnum.

The bank is targeting another CHF100 million to expand into other countries, including Singapore, Hong Kong, Britain, Germany and France. SEBA has partnered with Tokensoft and Digital Asset Shared Ledger (DASL) to enhance its digital asset services and was chosen by the French central bank to help road-test digital currencies.

But growth ambitions appear to have hit a hurdle in recent months, culminating in the resignation of chairman Andreas Amschwand in July. SEBA has been coy about the reasons for Amschwand’s abrupt departure and about how much extra capital it has been able to raise this year.

On Friday, SEBA announced that Päivi Rekonen, a Finnish national resident in Switzerland, had been chosen as its new chair of the board of directors. Ex-Swiss National Bank general counsel Hans Kuhn and former UBS banker Sanjeev Karkhanis were also elected to the board during a shareholders’ meeting.

Rekonen has held management roles at both UBS and Credit Suisse banks and at recruitment firm Adecco. She also holds a number of directorships in companies covering industrial, cyber-security, media and software sectors.

Media portal Inside Paradeplatz has reported on a number of alleged problems at SEBA, including differences of opinion among top managers and investors over future strategy. In addition to Amschwand’s departure, SEBA this summer also replaced its chief operating officer and chief technology officer.

https://www.swissinfo.ch/eng/-flagging--crypto-bank-seeks-renewed-impetus-with-board-rejig/46058042

Why am I not surprised

https://thedailychain.com/crypto-friendly-trading-app-robinhood-being-probed-by-sec-for-civil-fraud/

The price of gold and silver is rising in the face of a sharp economic downturn. Swiss company AgAu has chosen this moment to announce a precious metal-backed stablecoin onto the blockchain. It aims to provide better access to gold and silver and an alternative to bank-printed money.
Stablecoins are very much in vogue, especially after the launch of Facebook’s Libra project in Geneva last year. This type of digital cryptocurrency is backed by regular money or commodities that better control price fluctuations than bitcoin, whose value depends exclusively on the level of demand.

AgAu says it will store physical gold and silver in Switzerland and sell customers its tokens – each one a digital contract that grants the bearer direct ownership rights to a gram of either precious metal. The tokens would be freely traded with transactions validated and recorded on the Ethereum blockchain.

Read more: https://www.swissinfo.ch/eng/precious-metal-stablecoin-plugs-into-gold-frenzy/45903284

“The report of my death was an exaggeration.” That was the reputed response of Mark Twain on hearing that a newspaper had mistakenly printed his obituary. Are reports of the imminent demise of Switzerland’s blockchain sector also overblown?

Nearly 80% of 203 firms responding to a Swiss Blockchain Federation survey (https://mcusercontent.com/31e17f4dda489ed5ea930cfd0/files/66093541-33ce-499e-a376-0b360187b07d/SBF_Corona_Umfrage_Resultate.01.pdf) have warned of imminent bankruptcy. That would carve a huge hole in the 800+ firms and 4,000 employees that reports say make up the Swiss blockchain sector (https://www.swissinfo.ch/eng/crypto-valley_blockchain-start-up-growth-bucks-swiss-trend/44706400).

This seems to fly in the face of numerous reports of growth and innovation, such as Crypto Finance’s $14.5 million fresh funding, the impending funding round of Bitcoin Suisse, Mt Pelerin and ID Quantique successfully testing a quantum technology crypto storage safe or AlgoTrader launching its digital assets trading platform WIRESWARM.

Full story: https://www.swissinfo.ch/eng/switzerland-s-crypto-valley-not-quite-on-its-deathbed/45719750

YAPEAL has become the first financial institution in Switzerland to receive a fintech banking license. The new digital bank plans to challenge the traditional retail banking sector with personalized accounts tailored to individual clients.

The bank is building a community-style customer base known as “Yapsters” who will be among the first to try out its services based around their own needs.

This might include a new style of account for customers’ children or a robo-advisory service that balances income, fixed household costs and a client’s desire for different goods.

YAPEAL says it will charge simple flat fees rather than the complex system of opaque fees that high street banks typically charge clients. It also pledges not to lend out customer’s money unless they first give approval. YAPEAL also stated on Friday that it intends to launch a Visa debit card.

“YAPEAL is very pleased to have reached this fundamentally important milestone,” co-founder Andy Waar said in a statement. “We are working with high intensity to achieve market entry.”

“We are introducing a completely different style of banking,” Waar told swissinfo.ch in 2018. “I’m not even sure if you would call it banking – we don’t want to be put in the same frame as traditional banks. We will provide intelligent financial services that fit in with clients’ lifestyles.”

Fintech licenses were launched in Switzerland at the start of 2019, but it has taken well over a year for the first one to be awarded. Banks with this type of license are restricted to taking deposits of no more than CHF100 million ($106 million). The bank is not allowed to invest client assets or charge interest on them.

The license category was designed to cater to a growing number of so-called “challenger” banks, start-ups operating mainly in the digital space that offer customers a different array of services. While the Swiss Financial Market Supervisory Authority (FINMA) demands such banks to comply with certain strict criteria, the new license category is designed to be easier to obtain in other respects.

For example, fintech license banks only need a capital of at least CHF2 million compared to the minimum amount of CHF10 million typically demanded for a full banking license. The fintech license is envisaged by FINMA to be a stepping stone to a full banking license.

Lawyers contacted by swissinfo.ch in recent weeks said that only a handful of other financial firms have also applied for such a license. FINMA, which last year awarded full banking licenses to two banks offering crypto asset services, would not reveal how many fintech license applications it has received.

But lawyers also reported that a number of other firms are taking advice but are holding back to see how the front-runners fare in the application process. They speculate that the time delay in issuing the first fintech license may be down to the process being new to both start-ups and regulators.
https://bit.ly/2IYJops

Swiss fintech company Instimatch has launched into the Middle East, having won a licence to operate in Qatar, and signed up its first Kuwaiti bank. The mineral and cash-rich region is proving a magnet for financial innovation from Switzerland.

Instimatch’s digital platform directly connects deep-pocketed corporate, financial and municipal lenders with global investments. The unsecured money-lending market shifts $200 billion (CHF194 billion) per day in Europe alone.

The company, which is poised to incorporate Islamic finance-compliant solutions and blockchain into its platform, says Qatar will be a springboard for further expansion in the Middle East and later to Africa and Asia. Qatar’s Masraf Al Rayan and Ahli banks are among the 80-plus entities signed up by Instimatch, along with Kuwait’s Gulf Bank.

Since 2017, Qatar has faced a diplomatic and economic blockade from a number of countries in the region, including Saudi Arabia, the United Arab Emirates and Egypt. This has left the country seeking new conduits for trade and investment with the outside world.

Along with other countries in the region, Qatar recently launched a national fintech strategy to beef up its financial centre with digital innovations. This has attracted attention from fintech companies around the world, including Switzerland.

Competition
Digital banking service providers Crealogix, Avaloq and Temenos are already competing for customers in the region to integrate their software.

Last month, blockchain investment firm Crypto Valley Venture Capital (CV VC) and its business incubator CV Labs signed a deal with Dubai Multi Commodities Centre to launch a “crypto valley” in the emirate. The project aims to boost the region’s blockchain ecosystem with the help of other Swiss players such as Lykke, inacta and Tezos.

Blockchain company Lykke last year announced it was teaming up with Emaar Properties, one of the largest real estate developers in the Middle East that was behind the Burj Khalifa skyscraper, to puts its loyalty and referral rewards system onto a distributed ledger technology platform.

https://www.swissinfo.ch/eng/promising-market_swiss-fintech-firms-venture-deeper-into-middle-east/45540332

Central banks are contemplating a response to alternative money systems, such as bitcoin or Libra, with new digital versions of their own currencies. They go by the name of Central Bank Digital Currencies, or CBDCs.

Libra’s stablecoin project launched in Geneva last year was a “watershed” moment that “kicked everyone in the pants”, Michael Sung, a professor at Fudan University, told the recent Crypto Finance Conference (CfC) in St Moritz.

This prompted China to “massively accelerate” its drive to digitize the renminbi. Sung is convinced that the plan is to spread the RMB far from China’s borders and “increase adoption throughout the world.”

Aleksander Berentsen, a professor of finance at the University of Basel, speculates that the Chinese central bank may one day open its doors to commercial banks in regions such as Africa and South America. This would allow them to funnel digital RMB cross-border for their own companies and consumers to use.

This might compel other countries, particularly the United States, to respond in kind, prompting more CBDCs for the public to get their teeth into. But the Swiss National Bank (SNB) would want none of this. It would only contemplate “printing” a digital franc for professional traders.

Disrupting bank business
The SNB fears that creating a digital franc for the general public would divert its attention away from its main purpose of maintaining price stability. It also fears the consequences for high street banks. Who would hold a commercial bank account, particularly in times of economic stress, when they have the safer option at the SNB?

And if people stop depositing their pay cheques at commercial banks, away goes their revenue stream of lending customers’ money to others, whilst charging more interest on loans than they pay out on deposits.

So much for the theory, but what are CBDCs? Central banks “print” digital money all the time, which form their reserves. The SNB uses this money to buy financial instruments in other currencies, for example using francs to buy euro-denominated bonds. This is to keep the franc from appreciating too much, too fast.

The new form of CBDCs could be used for a variety of purposes: to internationalise the RMB, replace physical cash in countries like Sweden where there is declining public demand for bank notes and coins, provide a means of payment in Distributed Ledger Technology financial systems (such as the SDX digital assets exchange being built in Switzerland), or to grant basic banking services for people in countries with a weak commercial banking infrastructure.

Another advantage for the authorities is that they could better monitor who is paying what to whom than they currently can with physical cash.

https://www.swissinfo.ch/eng/digital-money_central-banks-weigh-up-response-to-libra-and-bitcoin/45545300

A building on Zurich’s most exclusive shopping street has been converted into a blockchain-powered investment following its CHF130 million ($134 million) sale. It is the latest attempt to unlock the value of bricks and mortar using digitally-coded tokens.

Bahnhofstrasse 52, which houses offices and a Swatch retail outlet, was bought by Zug-based real estate investment firm BrickMarkexternal link on Wednesday. The company has issued digital tokens, underpinned by a bond, which can be bought and eventually traded by investors who want a slice of the building’s rental income and increase in sale value.

BrickMark funded about 20% of the purchase by giving the seller, RFR Holding, a batch of its newly created tokens. This means that RFR Holding retains a stake in the future income of the building.

“There has never been a token-financed transaction of this magnitude,” said BrickMark CEO Stefan Rind in a statementexternal link. “We are implementing what was once no more than a concept in the real estate industry.”

The Bahnhofstrasse buildling is the first of a planned global real estate portfolio that could be worth upwards of CHF1 billion, the company said. BrickMark is accumulating a €50 million cash stockpile from investors but also intends to part-finance further acquisitions with its tokens.

Smart contracts
The tokens are created by drawing up digital “smart” contracts that entitle holders to a share of the portfolio’s financial spoils (they could also result in losses if the properties lose value).

The tokens are created and traded on a blockchain – a digital platform that proponents believe is a much more efficient system than the current paperwork-based method of buying and selling properties. The smart contracts embedded in the tokens can also be custom-made to automatically carry out a range of functions, such as paying dividends and fees.

BrickMark is the latest in a growing list of blockchain companies setting their sights on the real estate market. Last year, a consortium led by blockimmo converted a Swiss building into digital shares and sold a 20% stake to investors over the blockchain.

More recently, Geneva-based company WeCanexternal link tokenized two properties in Portugal in a €11 million deal, which it plans to repeat across other European countries.

https://www.swissinfo.ch/eng/tokenised-investment_slice-of-prime-zurich-real-estate-sold-on-blockchain/45495450

Swiss start-ups and young companies attracted nearly CHF2.3 billion ($2.4 billion) from deep-pocketed investors last year. The figure is nearly double the CHF1.2 billion collected in 2018 and sets a new record.

New ventures in the ICT and fintech sectors received the largest slice of funding (CHF1.2 billion), but financial support for early stage biotech firms also received a significant boost (CHF625 million), according to the annual reportexternal link from online news portal startupticker.chexternal link and the investor association SECAexternal link.

Four Swiss companies - ADC Therapeutics, GetYourGuide, Numbrs and wefox – achieved “unicorn” status last year, meaning they were valued at more than CHF1 billion. Investors poured sums in excess of CHF100 million into five companies, while CHF1.6 billion was concentrated into the top 20 financing rounds.

The report admits that calculating the financial returns for investors is imprecise given that not all start-ups disclose their sale price when they are snapped up by bigger firms. But based on figures that are available, it estimates an average 6.6-fold return on investments between 2005 and 2019.

Given the recent trend towards financing ICT and fintech start-ups above all other sectors, Zurich has gained further ground as the canton that attracts the most investor capital. Young companies in Zurich received CHF1 billion in funding in 2019.

New breakthroughs in financial technology (fintech), designed to provide better personal finance services and improve the performance of banks and insurers, once again increased in popularity.

Venture capitalists nearly doubled the amount of money (CHF360 million) they invested into fintech companies last year. But they left Switzerland’s growing blockchain and cryptocurrency sector virtually untouched.

Switzerland’s flourishing cryptocurrency and blockchain sector continued its expansion last year. But this did not stop renowned US economist Nouriel Roubini berating a gathering of blockchain enthusiasts at a World Economic Forum side event, telling them: “It’s all fluff, just total fluff.”

Roubini made his comments at the CV Summit in Davos on Thursday, following the presentation of a study that showed the number of Swiss blockchain companies and jobs increasing for a third year.

The self-styled “Crypto Nation” recorded 842 ventures in Switzerland and Liechtenstein by the end of 2019. This included the Libra stablecoin project that arrived with much fanfare last summer before running into a wall of potentially fatal protest from governments and regulators.

https://www.swissinfo.ch/eng/business/fluff-and-nonsense-_roubini-unimpressed-with-crypto-nation-switzerland/45514262

Global politicians, regulators, financiers and technology pioneers will soon be gathering in Switzerland for the World Economic Forum. This has not been lost on the blockchain and crypto industry, which is redoubling efforts to engage with policy makers.

Next week’s Crypto Finance Conferenceexternal link (CfC), in the up-market ski resort of St Moritz, has positioned itself to attract such big-hitters, days before they attend the annual WEF summit in nearby Davos.

Initially conceived as a match-making platform between deep-pocketed investors and blockchain start-ups, the third edition of CfC has now broadened its scope.

Cameron and Tyler Winkelvoss, the US billionaire bitcoin twins, are undoubtedly the star attraction, but the guest list also includes representatives from central banks, financial regulators and government advisors.

“If we only invited crypto enthusiasts then we would just hear a self-fulfilling prophesy that crypto is great and here to stay,” CfC CEO Nicolo Stöhr told me. “We need other voices from outside the blockchain community who can point out what needs to be improved.”

The goal is neither to preach to the converted or to convert the sceptics, says Stöhr. “We want people to come and decide for themselves. It’s no good looking the other way because crypto looks scary or you don’t understand blockchain. We want to provide people with high quality information.”

https://www.swissinfo.ch/eng/cfc-st-moritz_crypto-determined-to-emerge-from-the-shadows/45484446