A number of projects around the world aim to create digital versions of money. (© Keystone / Gaetan Bally)
Sygnum bank has launched a digital version of the Swiss franc (DCHF) to allow faster payments when trading a new breed of securities. The DCHF digital tokens will be backed by the corresponding amount of Swiss francs that Sygnum will hold at the Swiss National Bank (SNB).
Sygnum is part of a consortium of companies taking part in the SDX digital assets trading platform, which SIX Group plans to launch by the end of this year. The platform, along with others being developed around the world, promises faster, more cost-effective trading of company shares, bonds and other financial assets.
A digital currency is required to settle the payment of such trades. Several enterprises are underway to create so-called stablecoins that are backed by traditional money. US bank JP Morgan said it was trialling a version last year while the Libra project has set up shop in Geneva with the intention of launching a stablecoin for general public use.
A consortium of banks, including UBS and Credit Suisse, have formed the group Fnality International that aims to create a range of stablecoins backed by different currencies. The SNB is one of many central banks also exploring ways to issue digital versions of their currencies. The SNB project is specifically directed at settling traders on SDX.
Sygnum’s DCHF could also be used to pay out dividends on digital company shares, which would be automatically generated by smart contracts, the bank said on Monday.
“Trustworthy stablecoins are of central importance for the development of the digital asset economy,” stated Sygnum co-founder Mathias Imbach. “Our DCHF creates considerable operational efficiencies and at the same time promotes the development of new business models.”
One of the key goals of the digital asset movement is to allow small companies to raise capital at a fraction of the administrative expense associated with issuing shares on traditional stock exchanges.
Sygnum and SEBA banks were awarded full banking and securities dealer licenses by the Swiss financial regulator last year. Other companies, including Bitcoin Suisse, have also applied for licenses.
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