Bank consultants have been listening to their customers the same request for months. You would like to invest in cryptocurrencies like Bitcoin and Ether. The cadence of inquiries is steadily increasing. Bankers confirm this at every industry meeting. Meanwhile, first banks offer investment products, but everything is in its infancy.
But now efforts are increasing in Switzerland to set up the first real-time exchange for cryptocurrencies. Under the name SCX (Swiss Crypto Exchange), a platform is to commence operations. 2.5 million Swiss francs have been provided to investors for the development of the stock exchange. This is confirmed by the future Managing Director Cyrill Tröndle. From the 3rd of November customers can register. The partner bank is a Swiss bank whose name is not yet public.
Connection to banks planned
Behind the project is the company Swiss Future Project. Shortly she will rename herself in Blockworks and curb to Zurich – the company has rented office space in Dübendorf. Managing Director is Cyrill Tröndle. “Today you have to send your money abroad if you trade in Switzerland in real time with cryptocurrencies. We want to change that, “he says. The basic idea of the project is to build a platform that Swiss banks and their customers can join. “We want to bring the old and the new world together,” says Tröndle. The so-called MVP, the first version of the working software, was built. Tröndle is supported by the investment company Centurium and other investors, as reported by the “Sonntagszeitung” newspaper.
In the Swiss crypto industry, the plans of SCX meet with goodwill, but it is also noted how ambitious such an undertaking is.
Start first as a broker for Bitcoin and Ether
In a first phase, which begins in just a few weeks, SCX offers a brokerage. Registered customers can buy from SCX Bitcoin and Ether and receive them immediately. The price is based on the prices of the international stock exchange Bitstamp. An actual orderbook with buy and sell orders does not exist yet. So SCX is doing the same thing as the two other Swiss brokers Bitcoin Suisse in Zug and Bity in Neuchâtel. “It’s sort of a soft launch,” says Tröndle. This is intended to attract first customers, not only institutional investors but also private customers. This phase happens without the involvement of banks. Their integration is being driven forward in the meantime.
Only in a second phase should SCX receive the quality of a real exchange platform with real-time orderbooks. According to Tröndle, this should already be the case in the first half of 2018. The focus is then the connection to banks. They will also be the primary customer contact. This is intended to defuse the entire compliance issue.
Assets will be at the banks
Specifically, a customer keeps a normal account at the bank and pays there francs for the purchase of crypto currencies. For this amount, the customer can then buy at SCX, for example, Bitcoin. The counterparties on the SCX trading platform also all have an account with a Swiss bank, which allows the currency transactions to take place within the banking system.
SCX takes over the immediate matching of orders and finally the time-delayed settlement between the banks. Depending on the customer orders executed, one bank’s credits will increase in Bitcoin and the other in Swiss francs. The assets are at no time on the stock exchange SCX. “Customers just have to trust their bank, not us,” says Tröndle. The concept therefore includes that customers also have their crypto account with the bank.
The cryptocurrencies are in this second phase with the banks or possibly specialized companies – on behalf of the banks. Corresponding solutions are in the process of being created and are expected to be available in the first half of 2018. Unlike today’s Bitcoin offerings from Swiss banks, customers will be able to pay off their bitcoins or ethers, so they can have them sent to a private wallet.
Expansion abroad
Tröndle was originally a System Engineer at Swiss Re and had some startup experience. Most recently, the 25-year-old security consultant. His partners include people with technical know-how, lawyers, a former hedge fund manager, but also Xavier Buck, founder of the Internet domain specialist Euro DNS. He helped the Bitstamp Stock Exchange to be regulated in Luxembourg.
For now, the focus is on 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 goal is to merge trading orders from the respective countries into SCX, thus ensuring more liquidity.
SCX is in contact with the Financial Market Authority Finma. However, there are no official blessings from the authorities. “We know all facets of the laws and regulations that could affect us,” says Tröndle. SCX will comply with all specifications. For some topics, regulations were simply missing in black and white. In order not to lose time, it has decided to start now and simply follow the best practice approach.
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