Switzerland-based Cornèrcard Partners with Gemalto and Visa to Launch Card Featuring Biometric Fingerprint Reader

Switzerland-based Cornèrcard has partnered with Gemalto and Visa in order to introduce the nation’s first credit card that features a biometric fingerprint reader.

As noted on Cornèrcard’s official website:

“With the exclusive Cornèrcard Biometric Gold Visa credit card you hold a … high-tech product in your hands: your fingerprint – as unique as you – offers you the ultimate combination of security and comfort when paying. At the same time, with your limited edition of 100 cards, you can enjoy the personal scope you desire thanks to generous spending limits and exceptional additional services.”

Consumers must pay a one-time membership fee of CHF 300 (appr. $302) in order to obtain and start using the limited edition Cornèrcard Biometric Gold Visa card. The annual fee is CHF 190 (appr. $192), and the card can be used without paying any fees for the first year.

In order to register a fingerprint on the Cornèrcard Biometric Gold Visa credit card, users have to touch a sensor, with an LED that signals the successful capture.

To perform the first transaction with the card, users have to input a PIN. After the PIN has been entered (and accepted), users can begin confirming transactions at the point of sale by simply using their finger to touch the card’s sensor.

Davide Rigamonti, director at Cornèrcard, stated:

“The biometric payment card is not only special in terms of its appearance; it also guarantees a special payment experience and fits perfectly into the everyday life of the modern consumer.”

Swisscom, Deutsche Börse Settle Securities Transactions via DLT

Digital Securities

Swisscom, Deutsche Börse and three other partners have successfully settled a securities transaction using tokenized shares via distributed ledger technology (DLT).

Three banking partners participated in the digital asset transaction; Falcon Private Bank, Vontobel and Zürcher Kantonalbank.

According to Swisscom, the proof of concept event indicates the efficacy of digital securities in shares of SMEs.

Deutsche Börse and Swisscom jointly designed and developed the IT architecture with the systems hosted on Swisscom’s infrastructure.

The group explained that the share registry of a real Swiss enterprise was digitalized using the platform of the start-up company daura, and the shares were then tokenized. daura is a company that uses blockchain technology to digitize shares of small, medium-sized and established companies from Switzerland.

To enable the execution of a delivery-versus-payment transaction based on DLT, money was made available in the form of cash tokens provided by Deutsche Börse in Swiss Francs. Money was deposited as collateral in the central bank account of Eurex Clearing at the Swiss National Bank. The banks acted as counterparties and exchanged securities tokens against cash tokens using DLT.

The group reports that two different DLT protocols were utlized: Corda and Hyperledger Fabric.

Johs Höhener, Head Fintech at Swisscom, said that DLT has the potential to reach a new level of speed and efficiency in the financial services sector.

“In order to maintain Switzerland’s leading position in digital assets, cooperation and new platforms are needed,” said Höhener. “This proof of concept is an excellent example of successful collaboration and innovative strength across company boundaries.”

Jens Hachmeister, Head of New Markets at Deutsche Börse Group. said the event was of strategic importance to his company as it further develops the potential of securities transactions using DLT:

“This brings us one step closer to our goal of enabling the financial services industry in Germany and in Switzerland to efficiently use the potential of this new technology.”

Deutsche Börse and Swisscom are working on a comprehensive ecosystem for digital assets. Custodigit, a custody solution, is a joint venture of Swisscom and Sygnum.

Switzerland’s Stock Exchange Operator SIX Group Makes All-Cash Offer for Bolsas y Mercados Espanoles, a Spanish Stock Exchange Operator

Zürich-based Swiss Infrastructure and Exchange (SIX) Group AG, the operator of Switzerland’s stock exchange, recently revealed that it has made an all-cash offer for Bolsas y Mercados Espanoles, a Spanish stock exchange operator.

The deal would reportedly establish the third-largest financial market infrastructure group in Europe.

SIX is an established exchange seeking to incorporate blockchain technology. SIX plans a digital asset exchange for some time in 2o20.

The SIX Group, which is privately held by a select group of Switzerland’s financial institutions, will be offering €34 per share for 100% of BME, according to the company’s management. This would value the firm at around €2.8 billion (appr. $3.1 billion). Notably, the offer was made shortly after Euronext NV (a giant European stock exchange with offices in Amsterdam, Brussels, London, and Lisbon) revealed it was holding discussions with BME regarding a potential combination.

SIX chairman Romeo Lacher stated:

“This is in line with SIX’s growth strategy and our commitment to serve customers with highly reliable infrastructure services and seamless access to capital markets.”

The offer made is 33.9% higher than the closing price of BME’s shares on November 15, 2019. SIX’s management says it intends to keep BME’s stand-alone listing in the Madrid, Barcelona, Bilbao and Valencia Stock Exchanges.

SIX Group has reportedly been considering a potential acquisition of an EU-based bourse, according to sources familiar with the matter. BME and the Austrian Wiener Boerse AG are potential targets.

Euronext’s management has confirmed in a press release that it is now holding discussions with the Board of Directors of BME, which “may or may not lead to an offer being made.”

Euronext says that a “further announcement will be made as and when appropriate.”

Business Process as a Service Firm Avaloq Finalizes Acquisition of Derivatives Partners, a Financial Data Provider

Switzerland-based Avaloq, a company that offers a standardized Business Process as a Service (BPaaS) or Software as a Service (SaaS) model to financial institutions and wealth management platforms, revealed recently that it has finalized its acquisition of Derivative Partners, which was first announced in July of this year.

Derivatives Partners, a leading financial data provider, will reportedly retain all its current staff members and will continue to operate as an organizational entity.

Avaloq Group CEO Juerg Hunziker stated:

“We are delighted to have closed this significant acquisition, and I would like to thank the team at Derivative Partners for their utmost professionalism throughout the process. We are truly delighted to welcome them into the Avaloq Community, with our clients set to benefit from the firm’s extensive consulting capabilities and unparalleled know-how around structured products.” 

Hunziker added:

“The acquisition highlights Avaloq’s strong market confidence and underpins our vision of reinventing the financial experience in a fully digitized, always-on and data-driven world through powerful data analytics.”

Avaloq’s management says the acquisition will allow it to offer independent valuation, trading, and financial portfolio management to its new customers.

Founded in 2000 in Zurich, Derivative Partners offers various solutions for structured financial products to over 40 industry participants, which includes private financial institutions, issuers, asset managers and exchanges.

The company also specializes in determining regulatory requirements and portfolio management ratios. Additionally, Derivatives partners provides third-party valuation models and  quantitative support for trading and investment banking divisions. The company’s services also include life-cycle management, product governance, and media-related services.

The financial terms of the acquisition have not been shared publicly.

Avaloq recently announced that its online banking platform had gone live at Switzerland’s universal bank, Thurgauer Kantonalbank.

The International Securities Services Association Publishes Paper on Crypto-Assets, Makes Recommendations Regarding Issuance & Trading

The International Securities Services Association (ISSA), a Switzerland based association that promotes best practices in the securities sector, has added their voice to the emerging digital asset or crypto-asset sector. This includes security tokens, payment tokens (cryptocurrencies, stablecoins etc.) and utility tokens.

In October 2018, ISSA created a DLT working group to review the emerging sector of crypto-assets. The paper explores “the issuance, settlement, safekeeping and asset servicing of Crypto Assets from a practical point of view.”

“The potential of Crypto Assets to create new investable assets and investment eco-systems is unmistakable”

While acknowledging that DLT has the potential to create new asset classes and streamline services, the group is of the opinion that “disruption is less likely to occur through the disintermediation of existing roles than originally thought.” This is due to the fact that incumbent intermediaries still play a vital role. Whether the asset is digital or not – you still need custody etc.

The DLT working group states:

“a rapid transition from the securities markets of today to a marketplace dominated by Crypto Assets issued on DLT networks is unlikely to occur. At the moment, securities markets provide trustworthy capital-raising and channeling functions that work well. Instead, permissioned and non-permissioned DLT networks are likely to arise and co-exist alongside traditional securities market infrastructures. This creates the need for them to be able to inter-operate.”

While the promise of DLT and crypto assets may be obvious, the current complexity of the traditional ecosystem makes change really hard.

“DLT has the potential to shift post-trade processing from a linear model to a networked model. It is likely to encourage the emergence of new eco-systems, some of which will link end-investors and issuers directly. Other eco-systems will likely emerge that enable new entrants and new technologies to supplant existing service providers or provide entirely new services.”

For the issuance of assets, be they securities or otherwise, the DLT working group believes crypto assest have the potential to simplify the entire process. Highly illiquid or non-traditional assets can benefit from DLT as well.

Much of the paper targets how you take the current regime of securities management and apply distributed ledger technology to potentially remove some of the friction. But the disparate regulatory approach around the world is a significant hurdle There “remains considerable legal uncertainty.” Internationalization is going to take some time. There is a need for a global standard.

The DLT working group concludes:

“The standards that will enable DLT networks to inter-operate with each other, and with legacy systems, are not yet developed. The best way to overcome these challenges is to collaborate. Every participant in the Crypto Asset industry – issuers, investors, regulators, CSDs, custodian banks, CCPs, FMIs, vendors and Fintechs – will benefit from collaboration. By working together, agreement can be reached on the definitions of Crypto Assets, the legal and regulatory frameworks which govern them, and the business and technical standards that will allow all the ecosystems to inter-operate. It is the measure of agreement on those issues that will determine the rate of growth of the Crypto Asset markets.”

This is a very good paper and a must-read for securities professionals and regulators. You may download the paper here.

SEC and CFTC Charge Swiss-Based First Global Credit for Selling Unregistered Swaps for Bitcoins; Website Domain Seized by FBI

A Switzerland-based securities dealer called XBT Corp/First Global Credit has been charged and fined by the American SEC and CFTC for, “selling unregistered security-based swaps to U.S. investors using bitcoins and for failing to transact its swaps on a registered national exchange.”

The company’s website has been seized by the FBI and is now offline.

According to the SEC, swaps dealers selling to US investors must be registered under Dodd-Frank laws:

“First Global Credit used a variety of marketing methods to target and solicit U.S. individuals to deposit and use bitcoins to buy and sell a variety of investment products. Although First Global Credit used different terminology to describe the investments it offered, including ‘bitcoin Asset Linked Notes,’ investors were able to participate in the price movements of securities, including those listed on U.S. securities exchanges, without owning them. These types of instruments are considered security-based swaps under the U.S. federal securities laws. First Global Credit offered these swaps to U.S. investors without complying with the registration and exchange requirements governing security-based swaps, which were enacted as part of the Dodd-Frank Act.”

David Peavler, Director of the SEC’s Fort Worth Regional Office, said new terminology and new tech do not exempt investment-product dealers from having to properly register.

“Federal securities laws impose specific requirements for offering and selling security-based swaps to retail investors in the US,” said Peavler. “These obligations cannot be avoided merely by describing the swap transaction by a different name or funding it with digital currencies.”

The SEC says First Global Credit, “transacted with investors who did not meet the discretionary investment thresholds required by the federal securities laws.”

As well, company allegedly, “failed to transact its security-based swaps on a registered national exchange, and failed to properly register as a security-based swaps dealer.”

Without admitting or denying the SEC’s findings, First Global Credit agreed to cease-and-desist operations and pay disgorgement of $31,687 and a penalty of $100,000.

First Global Credit must also pay back investors who lost money

In a parallel action, the CFTC announced a similar settlement with First Global Credit.

The company will also pay a fine of $100,000 to the CFTC and must, “disgorge gains received in connection with its violations, and to cease and desist from future violations of the Commodity Exchange Act (CEA).”

“This case demonstrates that the CFTC will hold intermediaries accountable if they solicit or accept orders without properly registering with the agency,” said CFTC Director of Enforcement James McDonald. “This case also underscores that the Commission will continue working with our law enforcement and regulatory partners to ensure the integrity of our markets.”

The CFTC writes that the trades in question took place between March 2016 and July 2017, when First Global Capital, “solicit(ed) or accept(ed) orders for futures from U.S. customers and by accepting bitcoin to margin their trades without being registered with the Commission…(and) accepted orders from U.S. customers for the purchase and sale of commodity futures listed on the Chicago Mercantile Exchange Globex trading platform.”


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Swiss Regtech Firm Apiax Raises $6.6 Million in Series A Funding Round

Zürich-based Apiax, a Fintech firm that transforms complex regulatory requirements into digital compliance rules, has raised $6.6 million through a Series A investment round.

Founded in 2017, Apiax is a Swiss Regtech firm that builds and provides tools to transpose written regulations into binary, machine-readable rules. The digital compliance rules are used to develop new internet-based solutions and products that are “compliant by design.”

Apiax’s system regularly updates and verifies compliance rules, which are consumable through an App. They can also be integrated directly into traditional banking platforms via an easy-to-use API. 

Apiax’s proprietary technology helps legal and compliance teams by giving them control and full visibility over their digital rule sets. The company’s systems also helps client advisors serve their customers in a more efficient and compliant manner.

The funding round was led by San Francisco-based VC firm e.ventures and Paris-based VC team XAnge. The company’s existing investors also participated in the round, including Peter Kurer, DIVentures, Swiss ICT Investor Club (SICTIC), Zürcher Kantonalbank and Tugboat.

Apiax’s management is planning to use the capital to fund its “global growth plans,” support the development of its product and build up the company’s staff members.

Co-founder of Apiax, Nicolas Blanchard, stated:

“In recent months, we have created terrific momentum and a basis for international growth. With e.ventures and XAnge, we have found the perfect partners to boost our global expansion plans,” 

Andreas Haug, co-founder and managing partner at e.ventures, noted:

“We are impressed by the results Apiax is already delivering and confident that Apiax, with its ‘open compliance platform’ approach, has the best qualifications to establish a comprehensive and highly efficient solution for the fast-growing – but so far highly fragmented – area of compliance.”

Swiss Federal Council Receives Update on Stablecoins, Told Libra to be Classified as a Payment System

The Swiss Federal Council received an update yesterday regarding the topic of stablecoins and Facebook’s Libra specifically.

According to a post on the Swiss government website, Switzerland will continue to actively monitor discussions on new digital technologies such as blockchain/DLT and the country is generally open to innovative approaches in the financial market.

Regarding Libra and the Geneva, Switzerland based Libra Association, the supervisory authority FINMA announced on 11 September 2019 that, based on the information available, the project would be classified as a payment system and a corresponding license would be required. Thus Libra would automatically be subject to the Anti-Money Laundering Act and international standards in this area. This appears to be based on a belief that Libra will be based solely on fiat currencies, yet questions have arisen as to whether Libra will also include government bonds or other interest generating assets.

The Federal Council said it is keeping a “very close eye on global stablecoin projects and their associated opportunities and risks.”

There are reservations in the areas of financial stability, the fight against money laundering and terrorist financing, monetary and currency policy, and data protection. The Federal Council is committed to ensuring that the currency and stability policy challenges, in particular, are addressed through international cooperation between governments, central banks and supervisory authorities, with private providers also included.

Additionally, Switzerland is open to discussions on internationally viable standards in connection with the use of new technologies.

The upcoming annual meetings of the Bretton Woods institutions and the meeting of G20 finance ministers and central bank governors provide an ideal platform for these discussions.

Abandoning Ship: eBay, Visa, Mastercard and Stripe Exit Facebook’s Libra Association [u]

Following in the footsteps of PayPal, which walked away from the Libra Association last Friday, eBay and Stripe have now departed the alliance. In an update, Law360 has confirmed that Mastercard and Visa have exited the Libra Association as well.

“We highly respect the vision of the Libra Association; however, eBay has made the decision to not move forward as a founding member,” a company spokesperson told the Financial Times (FT). “At this time, we are focused on rolling out eBay’s managed payments experience for our customers.”

Stripe told FT that it plans to watch the progress at Libra and may consider rejoining at a later date:

“Stripe is supportive of projects that aim to make online commerce more accessible for people around the world. Libra has this potential. We will follow its progress closely and remain open to working with the Libra Association at a later stage.”

Libra is Facebook’s proposed in-app cryptocurrency system, which the company so far plans to back using a basket of global currencies and bonds.

Facebook’s announcement of Libra in May was met with an apparently unanticipated outcry from regulators around the globe.

Many warned that the rapid roll-out of a private currency network among Facebook’s 2.4 billion users could upset the global financial system and even perilously devalue small local currencies.

Regulators also expressed concerns that Libra could undermine global anti-money laundering and anti-terrorist finance laws and measures.

Many also pointed to Facebook’s poor track record in civil affairs, including allowing foreign interference in elections and the nefarious use of customer data.

Upon announcement of Libra, Facebook executives were immediately summoned to address American lawmakers.

After hearing from Libra lead, David Marcus, Maxine Waters, Chair of the powerful House Financial Services Committee, traveled with an entourage of American lawmakers to Switzerland to confer directly with Swiss officials on Libra.

The Libra Association is headquartered in Switzerland, and until last Friday included 38 members.

Remaining members include Visa, Mastercard, Uber, “blockchain” companies and  VCs as well as four “non-profit and multilateral organizations.”

Facebook founder Mark Zuckerberg is scheduled to testify before the American Congress on Libra on October 23rd.

Earlier this week, it became apparent that Libra’s Head of Product departed his position in August.

Update:

The Block researcher Larry Cermak has tweeted that Mastercard has also left the Libra fold.

Three Existing Shareholders Add Capital to Bloomio in Advance of Series A

Swiss crowdfunding platform Bloomio has received a CHF 800,000 capital injection from three existing shareholders according to a company release. The blockchain-based marketplace called that added capital a big step forward as the company plans for a forthcoming Series A funding round.

Capital invested to date stans at CHF 2.2 million, according to Bloomio.

Max LyadvinskyMax Lyadvinsky, co-founder and CEO of Bloomio, stated:

“Today we not only announce an increase of capital but also an increase of trust for Bloomio. Indeed, this new funding round has been achieved exclusively from existing shareholders, which is a clear sign of recognition for the work done so far as well as the belief in Bloomio’s future potential”

Bloomio said it will invest the newly raised capital for developing an AI system to assess and score fundraising companies. Additionally, the funds will be used to further enhance its technological solution to offer, both experienced and retail investors, a reliable, trustworthy and yet engaging way to invest in startups.

BIS, “Central Bank of Central Banks,” Exploring Interbank Digital Asset Settlement and Central Bank Digital Currency at Switzerland Innovation Hub

The Bank for International Settlements (BIS), popularly known as the “central bank of central banks,” will be engaging in two projects at the BIS’s newly-established Innovation Hub in Switzerland, one of which involves, “examin(ing) the integration of digital central bank money into a distributed ledger technology infrastructure.”

The BIS has signed an operational agreement with Switzerland’s SIX Exchange and the Swiss National Bank (SNB) to explore how a, “new form of digital central bank money would be aimed at facilitating the settlement of tokenised assets between financial institutions.”

According to the BIS:

“Tokens are digital assets that can be transferred from one party to another. The project will be carried out as part of a collaboration between the SNB and the SIX Group in the form of a proof of concept.”

In late September, SIX Group announced it is delaying the launch of its proposed platform for DLT (distributed ledger technology) settlement of “digital assets” until Q4 2020.

Bobby Brantley, co-founder of the MERJ Exchange in the Seychelles, which currently offers its own DLT platform for “digital assets,” said at the time that he believes concerns about regulations informed the delay:

“The challenge with introducing digital infrastructure has never really been the technology. The biggest challenge is building a robust regulatory framework to underpin it.”

SIX, the BIS and the SNB will also be working on a second project that seems to involve developing a market surveillance tool:

“The second project will address the rise in requirements placed on central banks to be able to effectively track and monitor fast-paced electronic markets. These requirements arise in particular from the greater automation and fragmentation of the financial markets, but also from the increased use of new technologies.”

Regarding the initiative, SIX CEO Jos Dijsselhof, remarked:

“We are pleased to contribute to this initiative and, through SIX Digital Exchange, to explore the technological possibilities with which the SNB could support token-based financial ecosystems in the future by providing digital central bank money for financial market participants.”

Agustín Carstens, General Manager of the BIS, who until recently was sharply critical of the idea of central banks issuing digital currencies, remarked that he is happy that one of the BIS’s innovation hubs will be located in Switzerland:

“We are very proud that one of the first three Hub Centres will be here in Switzerland, where the BIS has been based for nearly 90 years. Switzerland is a hotbed of innovation. This comes on top of its overall competitiveness, well-established financial ecosystem, and strong academic institutions specialising in technology.”

Other BIS innovation hubs are being set up in Hong Kong SAR and Singapore, the BIS writes.

CBDC: Bank for International Settlements and Swiss National Bank to Research DLT and Central Bank Digital Money

The Bank for International Settlements (BIS) has teamed up with the Swiss National Bank (SNB) in order to work on a Switzerland-based innovation hub that will initially conduct research into central bank digital currencies (CBDCs) and distributed ledger technology (DLT).

Financial services provider SIX is helping SNB perform research, which involves creating a proof of concept to explore how CBDCs may be used in the settlement of tokenized assets between different parties.

SNB’s project will use the SIX Digital Exchange (SDX) platform, which is currently under development and aims to be the first end-to-end exchange for crypto assets when it goes live in 2020. SDX will provide listing, trading, settlement and custody service.

The digital exchange platform will be used to conduct testing in order to find ways to integrate digital central bank money into DLT-enabled systems. Developers will be exploring the technical possibilities of integrating CBDCs into the existing Swiss Interbank Clearing System or issuing digital Swiss franc tokens through the SNB.

SIX CEO Jos Dijsselhof stated:

“We are pleased to contribute to this initiative and, through SIX Digital Exchange, to explore the technological possibilities with which the SNB could support token-based financial ecosystems in the future by providing digital central bank money for financial market participants.”

Additionally, the new innovation hub will work on a separate research project that will look into the different requirements that central banks must satisfy in order to track and monitor automated online financial markets.

BIS will also open two more innovation hubs in Hong Kong and Singapore as the institution aims to encourage international collaboration on innovative Fintech projects. BIS will also focus on identifying and preparing in-depth insights into emerging market trends and conduct experiments related to the application of technology to improve financial regulation.

Switzerland Fintech Startups Now Encouraged to Apply For Swiss FinTech Award 2020

Switzerland’s Finanz und Wirtschaft Forum announced this week it is encouraging all Swiss fintech startups to sign up for the Swiss FinTech Awards. According to the organization, the purpose of the Swiss FinTech Awards is to promote Swiss connects innovators and to continue to the Swiss fintech ecosystem.

FintechThe Awards specifically recognize outstanding fintech start-ups and fintech influencers. The winners are chosen by a renowned jury consisting of 20+ fintech experts. The grand finale and awards ceremony will take place after the leading annual fintech conference by Finanz und Wirtschaft Forum, ‘FinTech 2020.’”

The Forum also noted that Swiss founders (active in Switzerland and/or abroad) or organizations with a Swiss head office in the following fintech verticals are eligible to apply:

  • Crowdfunding
  • Crypto
  • Insurance
  • Dat Analytics
  • Investing and Asset Management
  • Payments
  • RegTech
  • Security
  • WealthTech

Award Categories are the following:

  • Early Stage Start-up of the Year: For fintech start-ups with a Swiss connection which don’t have a product-market-fit yet. 
  • Growth Stage Start-up of the Year: For fintech start-ups with a Swiss connection that has a product-market-fit and is on a growth trajectory. 
  • FinTech Influencer of the Year: For outstanding personalities or organizations that have advanced the Swiss fintech ecosystem.

All fintech start-ups with a Swiss connection can apply for the Swiss FinTech Awards until November 22nd. The finalists will be announced on February 28, 2020.

Liechtenstein Passes Progressive Blockchain Act

Liechtenstein’s parliament has passed the Blockchain Act, “(a) new law (that) aims to strengthen the legal certainty for users and service providers…to further promote the positive development of the ‘token economy’ in Liechtenstein…(and) protect the reputation of the country,” according to lawyer Dr. Günther Dobrauz,

The law was promised in May and introduced into parliament August 28th.

Dobrauz continues:

“The government has decided to regulate not only the current Blockchain-applications (in particular cryptocurrencies and initial coin offerings (ICOs)), but also to establish a legal basis for the entire scope of application of the token economy according to a long-term approach, which should also meet the needs of future generations.”

Liechtenstein is a small country in Europe that borders Switzerland. Like it’s mountainous neighbor, Liechtenstein has a strong financial sector and is not a member of the EU.

The country is ruled as a constitutional monarchy and the Royal Family retains many veto powers.

SMART VALOR CEO Olga Feldmeier feted the passing of the law in a post at LinkedIn:

“Oh what a big day! …Liechtenstein passes the blockchain act without any rejections! The big victory for hashtagcryptocurrency and hashtagblockchain industry. As the Parlament discussed the new law, that same moment I had a pleasure to exchange views on innovation in fintech with Alois, Hereditary Prince of Liechtenstein and US Ambassador at the 300 years Liechtenstein celebration in Vaduz. Impressive visionaries and great leaders!”

SMART VALOR  is a Liechtenstein-based digital asset exchange which Feldmeier says, “is set to be one of main beneficiary (sic) of this regulatory process, making tokenization of real assets reality.”

Feldmeier also called on businesses and individuals to contact her if they have, “a great asset to tokenize and put on our exchange to trade.”

According to Lexology.com, Liechtenstein’s Blockchain Act, “has been drafted broadly and does not use the term ‘blockchain,’ instead using the term ‘transaction systems based on trusted technologies (VT systems)’ as a way to describe blockchain systems such as Ethereum. The Liechtenstein government hopes that this use of more abstract terminology will enable them to future-proof and keep the law valid for the next generations of technology and to allow for the flexible interpretation within a light-touch regulatory framework.”

Further:

“The Blockchain Act allows every possible asset, including real estate, bonds and securities, to be tokenised, digitalized and listed on a cryptocurrency exchange. The legislation also specifically regulates:

  • the ownership of digital assets (i.e., tokens);
  • the transfer of ownership of digital assets;
  • the safe storage of digital assets;
  • legal requirements for the storage of digital assets;
  • several levels of licensing for business providers in the token economy; and
  • Security Token Offerings (STO’s), Initial Coin Offerings (ICO’s), Token Sales and Token Generation Events (TGE’s).”

Report: Prominent Libra Association Members Now Hesitant About Officially Endorsing Facebook’s Currency Project

Officials at VisaMastercardPayPal, and Stripe are reportedly hesitating now about officially signing on as members of the Libra Association, a governance consortium assembled by Facebook to advise on its proposed private, in-app currency system, Libra.

The 28 current members of the Libra Association are reportedly being asked to make their affiliation official later this month. Membership thus far has involved only the signing of non-binding letters.

In response to Wall Street Journal coverage about cold feet at the Libra Association, Libra lead David Marcus tweeted October 1st that, “official 1st wave of Libra Association members will be formalized in the weeks to come…”

When Facebook announced Libra in June, the company was immediately slammed by denouncements from regulators around the globe, who warn the system could not only undermine global anti-money laundering efforts, but could also cause the collapse of small currencies and undermine management of local and global monetary systems.

According to Bloomberg, Visa, Mastercard, PayPal and Stripe leaders are concerned a formal relationship with Libra might bring heat.

They also fear their own working relationship with regulators could be harmed by the association.

Facebook may have also been overly sanguine about Libra’s prospects when pitching it to the companies, says Bloomberg, citing claims from unnamed sources:

“Executives at the payments companies believe Facebook oversold the extent to which regulators were comfortable with the project and are concerned about the perception the social network hasn’t behaved responsibly in other areas — such as how it has handled user data and privacy…”

Companies that join the Libra Association are being asked to invest $10 million USD in Libra.

So far, Libra is conceived as a stablecoin cryptocurrency managed on a blockchain and backed by a basket of real-world currencies and bonds denominated about 50% by USD.

Three sources to Bloomberg say Libra Association reps will meet in Switzerland on October 14th to sign the Association’s charter.

A spokesperson for Stripe says the company’s relationship to the Libra Association has not changed:

“Nothing has changed with our involvement with Libra since we came on to participate…We agreed to work on the charter with these other participants. We continue to work on the charter. We’re still actively involved.”

PayPal has been contacted regarding these reports and any comments will be appended here.

Libra Association Schedules Meeting in Switzerland. So What is on the Agenda?

It has been widely reported that the founding members of the Libra Association, Facebook’s stablecoin initiative, have scheduled a meeting to take place in Geneva, Switzerland on October 14th. As the crypto advocates gather, one has to wonder what is on the agenda.

First reported by WSJ.com, it appears that “cracks are forming” in the coalition of companies initially supporting the non-sovereign cryptocurrency which has the potential to upset more traditional types of fiat currency.

Visa and Mastercard are said to be getting cold feet and reconsidering its initial commitment to Libra. There have long been rumblings of other members on the founding list second-guessing their early support.

It does not help that both Germany and France have recently criticized Libra.

Reported early this month, the French Minister of Economy and Finance Bruno Le Maire clearly stated that Libra should not be allowed in Europe.

His cautionary tone was soon echoed by public officials in Germany.

Christian Democratic Union parliamentarian Thomas Heilmann, a policymaker said to be responsible for creating CDU’s policies on blockchain technology, said the German government will not allow projects like Libra to introduce their own cryptocurrency.

Of course, there is the United States where both the Executive Branch and Congress appear to be leaning against Facebook’s vision of a global currency beyond government control.

David Marcus, the “co-creator” of Libra and head of affiliated crypto wallet Calibre, addressed the topic in a series of tweets.

Marcus stated:

“… change of this magnitude is hard and requires courage + it will be a long journey. For Libra to succeed it needs committed members, and while I have no knowledge of specific organizations plans to not step up, commitment to the mission is more important than anything else.”

Marcus criticized the WSJ article’s innuendo that Libra was not well secured against illicit activity calling this “categorically untrue” and “BS.”

He added that Libra was “calmly, and confidently working through the legitimate concerns that Libra has raised by bringing conversations about the value of digital currencies to the forefront.”

But the challenges to Libra have grown since Facebook announced the pending launch.

At a recent Congressional hearing, SEC Chairman Jay Clayton was asked if Libra was a security. While he did not directly answer the question, Clayton clarified that if holders get a return on an asset it probably would be a security – and thus a regulated asset.

One topic of discussion that is certain to come up is whether, or not, Libra should be pegged to a single currency such as the US Dollar or Euro – similar to other stablecoins. That may allay much of the regulatory concern. Currently, Libra is expected to be a basket of currencies and other assets (such as sovereign debt) and thus may generate a return.

But then why would Libra members want to be part of the Association?

It does not help that Facebook has an abysmal record on safeguarding user information and its penchant for fake news. Do people really want Facebook to create their very own monetary system beyond the reach of anyone but themselves?


Switzerland-based EST Group Is Planning to Invest $250 Million into Indian Fintech Firms

Switzerland-based EST Group announced on September 27 that it will invest $250 million in the next 18 months into various Indian Fintech companies.

EST Group said in a release that it is very bullish about the Indian market due to great potential for new opportunities.

CEO and Director at EST Group Sindhu Bhaskar noted:

“India’s largest asset is its intelligent and educated human capital and it is important to use these resources by allowing them to innovate in a problem area and then giving access to capital.” 

EST Group’s investment will go toward the organization’s vision of “building an aggregated platform for capital, that will allocate impactfully to help growth sectors in [India’s] economy,” according to an official statement.

Sajid Jamal, who leads EST Group’s venture fund, stated that the amount of capital invested is sufficient, however, it’s scattered. He explained that EST is planning to aggregate unused capital by investing in financial technology, while using AI voice command technology to allocate capital to small and medium-sized businesses (SMEs), startups and agriculture verticals.

Jamal added:

“For this, we have decided not to start from scratch but to invest in existing platforms and then connect this platform to one larger ecosystem platform that will help in enhancing growth in the economy by solving grassroots problems.”

EST Group provides asset management and financial advisory services. The company also conducts semi-banking operations, and offers custodial, clearing and settlement and security issuance services. 

EST Group has business offices in Europe, London, Latin America, and southeast Asia.

The group’s recently established UK-based fintech arm is planning to invest in financial markets, banking operations, AI-enabled wealth management services, machine learning and blockchain technology.

Launch of Switzerland’s SIX Exchange Digital Asset Platform Delayed Until Late 2020

SIX Group, a company that provides infrastructure, processing and settlement for Switzerland’s financial sector, has announced it will be delaying the launch of a proposed DLT (distributed ledger technology) platform for the settlement of “digital assets” until Q4 2020.

The platform, which would allow the company to both launch and provide trading of digital tokens was expected to go live this year.

A prototype of the proposed network has launched, however, and is now being tested.

SIX currently runs the SIX Swiss Exchange, Switzerland’s largest conventional stock market after the Berne eXchange.

SIX’s digital asset platform was highly anticipated, but the landscape for “crypto assets” has shifted significantly in recent months following the issuance of strong FATF guidelines for crypto market oversight and an announcement from Facebook that the social media behemoth is seeking to launch an in-app, global currency system.

There is some suggestion in the release regarding the postponement that SIX may be stepping gingerly now, given the regulatory row kicked up by the announcement of Facebook’s Libra.

SIX says it will use the prototype, “to showcase the future of financial markets to the community and obtain feedback as well as demonstrate that a distributed CSD – based on DLT – can be integrated with a central order-book stock exchange model to ensure fair market conditions for all.”

In theory, DLT systems automate settlement, which has been previously managed by third parties like the Depository Trust and Clearing Corporation (DTCC).

DLT startups have alleged that firms like the DTCC enjoy a virtual monopoly over stock settlements, and that their services are too costly.

DTCC’s has stated that its purpose as an industry-owned infrastructure is to ensure the safety and soundness of markets through governance and risk mitigation. DTCC is overseen by regulators in jurisdictions where they provide services.

The DTCC accordingly functions as a “public utility” of sorts that is also accountable for oversight.

The company has asked how governments can feasibly monitor hundreds of small “digital asset” platforms that are using different DLT or blockchains.

In addition to payments enablement, SIX says it’s DLT will include risk-reduction and transparency mechanisms:

“Test-cases will showcase the potential of SDX’s riskless trading model, as well as settlement on DLT. Early stage functionality will cover digital security token issuance as well as live trading and instant settlement. This will include the cash-leg of the transaction embracing the concept of a payment token as well as access to a distributed portal where it would be possible to monitor transactions across specific DLT member nodes.”

Notably, the DTCC has plausibly claimed that DLT typically can only handle gross settlement and not net. This, so far, appears to be the case.

As long as there is money to be made and the potential for cost reductions, companies nonetheless continue to pursue DLT as a possible way of delivering more to their bottom lines.

University of St. Gallen Launches Blockchain-based Diploma Verification Pilot

The  is launching a blockchain-enabled pilot project that verifies the authenticity of diplomas within seconds, instead of taking several days when using the traditional system.

Harald Rotter, the university’s CIO, told CNN Money in a recent interview that the degree verification software “could be necessary and it could be a valid use case to transfer or to make easier to validate our diplomas based on a digital process on blockchain.”

The University of St. Gallen has teamed up with Swiss blockchain firm BlockFactory and will use its degree verification platform to issue immutable diplomas that are recorded on the Ethereum blockchain.

The Malaysian Ministry of Education recently revealed that it will be using E-Skrol, a software program based on the NEM blockchain, to determine whether diplomas are authentic. 

Malaysia’s education minister Dr. Maszlee Malik said that the issue of fake degrees has negatively affected the nation’s higher education system. 

He remarked:

“There are people who latch on to the reputation of Malaysian public universities to improve their profiles by displaying fake certificates. I believe the blockchain application can change this situation.’

In January 2019, the University of Bahrain announced that it will issue diplomas on the blockchain.

The university will use the Blockcerts open standard through a partnership with Learning Machine, a company that provides a platform to issue verifiable diplomas via a blockchain-enabled format.

In Light of FINMA Guidance on Stablecoins, Libra Will Pursue Payment System License

Following the announcement by the Swiss Financial Market Supervisory Authority (FINMA) has issued guidelines on the treatment of stablecoins under Swiss law, the Libra Association, a non profit based in Geneva, Switzerland, will pursue a license as a payment system with lead supervisory authority under the Swiss Financial Market Supervisory Authority (FINMA).

Libra is a proposed stablecoin planned by Facebook. Libra is expected to be based on a basket of assets and used to make payments and transactions on Facebook and, perhaps, other platforms. Libra hopes to launch next year.

The Libra Association submitted a request for a ruling to clarify the regulatory status of the Libra Association and the Libra coin and now intends to file an application for a license as a payment system.

The Libra Association said that Switzerland, with a principle-based and technology-neutral regulatory framework, along with regulatory clarity on blockchain-based business models, offers a “pathway for responsible financial services innovation harmonized with global financial norms and strong oversight.”

Dante Disparte, Libra Association’s head of policy and communications, issued the following statement after the announcement:

“Since our vision for the Libra project was announced 3 months ago, we have maintained our commitment that technology-powered financial services innovation and strong regulatory compliance and oversight are not in competition. We are engaging in constructive dialogue with FINMA and are encouraged to see a feasible pathway for an open-source blockchain network to become a regulated, low-friction, high-security payment system. This is an important step in Libra project’s evolution, and we look forward to continuing our engagement with all stakeholders over the coming months.”

The Libra Association states that its stablecoin is envisioned as a financial services network that can “level the playing field for people on the margins of basic payment networks and financial services.”

Simultaneously, the Association believes the community of Fintech entrepreneurs, companies and others, can develop innovative solutions on an interoperable, secure and compliant payment network.

Facebook has received significant questions by US policymakers regarding the creation of a stablecoin. Observers believe that the crypto could be quickly utilized by Facebook’s hundreds of millions of global users in effect creating a non-sovereign digital currency.