Blockchain within wealth management is in early stage development, of that there is no doubt but, according to Efi Pylarinou, there are some live largescale applications.

Firstly, as an infrastructure in capital markets. “Distributed ledger technology is making settlement and clearing into a single process,” she says.

Secondly, she says, blockchain is enabling the creation of a new asset class either by tokenizing existing assets or creating new ones. “In particular, assets like art or real estate and other passion assets are starting to get some attention as candidates to be tokenized. However, again, this is very early stage,” she explains.

Efi Pylarinou thinks that Switzerland is particularly well placed to continue innovating and find workable use cases for blockchain.

“The Swiss have a long history of innovation and in long term strategic commitments. Trust, security, and decentralized governance has been native in the Swiss society. We have lots of success when it comes to data security and managing risk,” she says.

The industry is feeling its way forward. The Crypto Valley Association (CVA) launched in December an Asset Tokenization Paper, which is a collaborative effort of the blockchain ecosystem. It defines the tokenization process for Swiss companies, addresses legal and technical questions relating to asset tokenization, and provides guidance to those engaging with security tokens. The overall aim is to shape a strong framework for blockchain technology in Switzerland.

Thought leadership is one thing. Real life use cases and applications are also key.

“We are starting to see the emergence of real-life case uses. In 2019, we saw developments in terms of the number of pilots that are using blockchain as an infrastructure tool. Some of the big incumbents such as Societe Generale and BBVA have successfully used blockchain for the issuance of bonds. Calastone recently went live with its blockchain Distributed Market Infrastructure for the administation of mutual funds,” she says.

In addition, the granting of licenses to two crypto banks in Switzerland, Sygnum and SEBA, is a significant first on a global basis. SEBA bank, is fully operational and offers a range of crypto services including asset management, trading, custody, and corporate finance. Its wallet enables customers to convert between cryptocurrencies and fiat. Customers can also hold traditional investments such as stocks and ETFs. Sygnum Bank offers asset management services and recently launched a Digital CHF Token (DCHF) pegged 1:1 to the Swiss Franc. DCHF is collaterlaized by the equivalent amount in CHF held at the Swiss National Bank.

Pylarinou also cites the Swiss stock exchange SIX initiative, SDX. It has launched a pilot and aspires to build a full-blown exchange for digital assets. And one of the largest asset managers, WisdomTree, launched in December 2019 a crypto Bitcoin ETP that is not cash-settled and is listed on SIX. Amun, the world`s first Digital Asset ETP issuer has several offerings on SIX too.

Several Swiss entities have launched a variety of tradeable financial products to gain exposure to digital assets and the sector. They come in the form of certificates, ETPs, structured products and tokens.

“It will take off slowly but surely,” says Pylarinou. “Switzerland has all the cooking ingredients.”

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This article originally appeared in The Wealth Mosaic's 2020 Swiss Wealth Technology Landscape Report. Click here to access and download this report:
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