Jos Dijsselhof, the CEO of SIX, the owner of the Swiss stock exchange, announced that the organization will launch a new, fully regulated cryptocurrency exchange.
According to Disselhof, “It is abundantly clear that much of what is going on in the digital space is here to stay.” Because of this observation, SIX will enter the space, with oversight from the Swiss national bank, and FINMA, the Swiss regulator. Switzerland is already one of the more crypto-friendly countries in the EU, and this move brings them one step closer to acceptance of this inevitable direction in finance and commerce. Unlike the US and other countries, Switzerland has clarified a number of regulations on how companies that trade in digital assets are expected to operate. While regulations can be overbearing and oftentimes serve as a barrier to entry for smaller startups, the clarity at minimum provides such companies with a framework in which they may safely operate without fear of prosecution.
This move may seem surprising to some people, given that the cryptocurrency market has only just bounced back, with Bitcoin trading at just over $6,600, compared to its all-time-high of over $20,000 in late 2017. However, trading volume is still way up, compared to this time last year, and all previous years, indicating that the market is beginning to stabilize.
Dijsselhof states that we are at the beginning of a “new era for capital markets infrastructures.” Digital currencies, and blockchain in general, are not going anywhere, despite unfriendly governments and regulators clamping down on the voluntary trading of digital assets between individuals around the world.
With more institutional money in the digital asset market, trading volume can only go up. It takes time for institutional investors to prepare to enter the market, as they develop infrastructure to protect their investments. This includes setting up trading accounts, as well as custody solutions. Earlier this month, Coinbase announced that 10 clients have registered for their digital asset custody services. As they and other companies continue to expand their customer bases, more institutional money will follow. The 10 hedge funds and family offices that signed up for Coinbase’s services are just the beginning, with the CEO of Polychain Capital, a $1 billion crypto hedge fund stating, “Coinbase is incredibly well-positioned to store the next $100 billion of crypto assets.”
Another possibility for the timing of the launch of the Swiss crypto exchange is the end of the summer. Historically, trading volume increases in September. If this holds true for the crypto market in 2018, then the exchange may come just in time to capture some of that market.
The SIX crypto exchange will offer end-to-end trading, settlement and custody services, making it appealing for institutional investors. They will be able to store their Bitcoin, and other cryptocurrencies and digital tokens on the platform, giving them a layer of protection for their clients’ wealth.
The head of securities & exchanges at Six, Thomas Zeeb 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.” If SIX is successful with its custody services, there will be one fewer barrier to entry for institutional money to enter the digital market.