Blockchain
The Swiss financial industry has successfully traded and settled tokenized investment products
For the first time, key players in the Swiss financial industry successfully developed and tested a novel settlement mechanism for tokenized investment products on a public blockchain testnet infrastructure. A smart contract, developed by the Capital Markets and Technology Association (the CMTA), allows for streamlined processes, reduces complexity, raises security, and eliminates counterparty risks from trades. The CMTA’s proof of concept marks a milestone for the Swiss financial industry.
The proof of concept involves:
- the issuance of tokenized investment products recorded on an Ethereum test blockchain,
- the trading of these products in Swiss francs on a regulated Swiss securities exchange, and
- the settlement of trades through a smart contract developed by the CMTA.
These three distinct operations – issuance, trading and settlement – all happened within hours, when they take days to unfold in a traditional financial environment.
“We are very proud to have developed this groundbreaking mechanism with numerous partners from the financial and technology industries,” says Jacques Iffland, Chairman of the CMTA. “It will enable the industry to increase efficiency, simplify cross-border settlement and improve the quality of service. And customers will benefit from the efficiency gains.”
Vontobel and Pictet each issued an actively managed equity certificate representing a basket of equities, while Credit Suisse issued a structured note, which were associated with digital tokens recorded on an Ethereum test blockchain, a process commonly referred to as “tokenization”. These securities were then traded on the platform of BX Swiss, a FINMA regulated Swiss securities exchange. The trades were settled bilaterally on the blockchain. To do so, the participants used an on-chain mechanism that secures the parties’ obligations. The settlement in fiat currency (Swiss franc) was made possible by an application called DLT2Pay, a product of targens, that connects the blockchain with the Swiss Interbank Clearing (SIC), the real-time gross settlement (RTGS) payment system of the Swiss National Bank. The proof of concept leveraged the CMTA’s standard token format and smart contract (CMTAT), and another smart contract that replicates the delivery-vs-payment functionality of traditional settlement systems. The creation, security aspects and technical operation of the smart contracts, were carried out under the leadership of Taurus, whose technology was used to issue and manage the structured products across their full lifecycle.
The proof of concept was developed and carried out under the aegis of the CMTA, with the support of representatives of BX Swiss, Credit Suisse, Homburger, Lenz & Staehelin, METACO, Pictet, targens, Taurus, UBS and Vontobel.
The proof of concept lays the foundation for an alternative Swiss post-trade infrastructure that functions without central parties (central counterparty and central securities depositary) and enables participating banks to benefit from cost advantages along the entire value chain of securities transactions (issuance, settlement and custody).
Daniel Gorrera, Head Digital Assets at Credit Suisse, said: “The transactions carried out today clearly establish that products tokenized on a public blockchain can be traded on regulated trading platforms and that the settlement of transactions on tokenized products can be carried out in fiat currencies without creating any counterparty risk. The successful proof of concept is a crucial first step for unlocking the benefits of tokenization in the future.”
Steve Blanchet, Head of Group Tech Strategy and Innovation at Pictet said: “Tokenization is a key strategic element for the future of asset management. It enables issuers to streamline the processes that govern the creation of investment products in a way that is currently not achievable with traditional infrastructures, and to drastically reduce time-to-market. With the solutions we tested in the proof of concept, processes that are currently matters of days can be reduced to a few hours, and eventually down to minutes or less.“
Anna-Naomi Bandi-Lang, Structuring – Credit Solutions at UBS Investment Bank said: “Tokenization has many use cases, but for it to become an established feature of modern financial markets, the ability to trade tokenized products in major currencies and through regulated trading venues is key. The CMTA’s proof of concept demonstrates that there is a path to achieve this goal.”
Marco Hegglin, Chief of Staff Structured Solutions & Treasury at Vontobel, said: “This proof of concept is just a first step on the way to defining a new standard for structured products in the form of a smart contract. Structured products are not only innovative products, they are also predestined for state-of-the-art technology. With a fully automated smart contract covering the entire lifecycle, the possibilities that can be expressed in pure code language are almost unlimited, and the blockchain technology can help designing new generations of financial products.”
Matthias Müller, Head of Markets at BX Swiss, said: “First of its kind, this proof of concept demonstrated that trades carried out on-exchange can be settled on a public blockchain directly between participants. It is no longer necessary for the parties to secure a transaction by transferring tokens or cash to the exchange ahead of trade. This is a significant advantage in terms of speed, cost, and risk management. The smart contract used for the settlement eliminates the counterparty risk that would exist if the cash leg and the asset leg of the transactions were completed independently from one another. The new regulatory regime for DLT-based trading platforms will allow BX Swiss to take full advantage of these developments.”
Jean-Philippe Aumasson, co-founder of Taurus SA and Chair of the CMTA’s Technology Committee, said: “We are delighted to see a consensus building around the use of open standards for DLT-based market infrastructures and to see that the CMTA’s smart contracts are being recognized as reliable technology in this respect. Using collaboratively developed open-source smart contracts reduces development and due diligence costs for participants and contributes to the reliability and efficiency of the Swiss fintech ecosystem.”
Samuel Bisig, Business Development and Product Manager at targens GmbH in Stuttgart, said: “targens’ DLT2Pay solution provides the missing link between a DLT/blockchain and a payment transaction protocol (here: central banks’ clearing systems) for the cash settlement of securities transactions. As long as central bank digital currencies (CBDCs) are not available, such a “trigger solution” is key if digital assets are to be traded otherwise than in private cryptocurrencies.“
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Glidelogic Corp. Announces Revolutionary AI-Generated Content Copyright Protection Solution
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Ethereum ETFs Aren’t Blockchain But Is A Revolutionary Tech: Top 6 Amazing Reasons To Invest In Them
The financial landscape is rapidly evolving, with the integration of blockchain technology and cryptocurrencies becoming more prominent. Among these, Ethereum ETFs (Exchange-Traded Funds) have emerged as a significant investment vehicle, offering exposure to the Ethereum blockchain’s native cryptocurrency, Ether (ETH), without requiring direct ownership. However, it’s crucial to understand that Ethereum ETFs are distinct from the blockchain itself and serve different purposes in the investment world.
Understanding Ethereum and ETFs
Ethereum: A decentralized platform that enables the creation and execution of smart contracts and decentralized applications (dApps). It operates using its cryptocurrency, Ether (ETH), which fuels the network.
ETF (Exchange-Traded Fund): A type of investment fund that holds a collection of assets and is traded on stock exchanges. ETFs can include various asset classes, such as stocks, commodities, or bonds.
Ethereum ETFs: The Intersection of Traditional Finance and Cryptocurrency
An Ethereum ETF provides a way for investors to gain exposure to the price movements of Ether without directly purchasing the cryptocurrency. This is achieved through an ETF structure, where the fund holds assets linked to the value of Ether, and investors can buy shares of the ETF on traditional stock exchanges.
Key Features of Ethereum ETFs:
- Indirect Exposure: Investors gain exposure to Ether’s price changes without needing to manage or store the cryptocurrency themselves.
- Regulatory Compliance: Unlike the relatively unregulated cryptocurrency market, ETFs operate under the oversight of financial regulators, offering a layer of investor protection.
- Accessibility: Ethereum ETFs are available through traditional brokerage platforms, making them accessible to a broader range of investors.
Why Invest in an Ethereum ETF?
- Diversification: Including an Ethereum ETF in a portfolio can provide exposure to the cryptocurrency market, potentially enhancing diversification beyond traditional assets.
- Convenience and Familiarity: ETFs are a familiar investment product, simplifying the process of investing in cryptocurrencies.
- Professional Management: ETF managers handle the investment decisions, including the buying and selling of assets, which can be advantageous for those less familiar with the cryptocurrency space.
- Regulatory Oversight: ETFs are subject to regulatory scrutiny, potentially offering more safety and transparency compared to direct cryptocurrency investments.
- Potential for Growth: As the cryptocurrency market grows, ETFs linked to assets like Ether may benefit from rising prices.
Key Differences Between Ethereum and Ethereum ETFs
While both are related to the Ethereum blockchain, Ethereum itself and Ethereum ETFs represent different forms of investment:
- Ethereum (ETH):
- Direct ownership of the cryptocurrency.
- Full exposure to Ethereum’s features, including staking and network participation.
- Traded on cryptocurrency exchanges.
- Highly volatile and largely unregulated.
- Ethereum ETF:
- Indirect exposure through shares representing Ether’s value.
- Traded on traditional stock exchanges under regulatory oversight.
- Offers a more stable and familiar investment structure.
- Typically lower volatility compared to direct cryptocurrency ownership.
Future Considerations for Ethereum ETFs
The approval and launch of Ethereum ETFs mark a significant milestone in bringing cryptocurrencies closer to mainstream finance. They offer a convenient and regulated means for investors to gain exposure to the growing digital assets market. However, they also come with limitations, such as not allowing direct participation in the Ethereum ecosystem’s innovations, like dApps and smart contracts.
As the market evolves, we may see more sophisticated financial products that better capture the full potential of the Ethereum ecosystem. For now, Ethereum ETFs provide a balanced option for those interested in cryptocurrency exposure within the framework of traditional finance.
In conclusion, while Ethereum ETFs offer a gateway into the world of digital assets, they should be viewed as complementary to, rather than a replacement for, direct investment in the underlying blockchain technologies. Investors should carefully consider their investment goals, risk tolerance, and the unique attributes of both Ethereum and Ethereum ETFs when making investment decisions.
Source: blockchainmagazine.net
The post Ethereum ETFs Aren’t Blockchain But Is A Revolutionary Tech: Top 6 Amazing Reasons To Invest In Them appeared first on HIPTHER Alerts.
Nexo, a leading institution in the digital assets industry, has reinforced its commitment to data security by renewing its SOC 2 Type 2 audit and attaining a new SOC 3 Type 2 assessment without any exceptions. This rigorous audit process, conducted by A-LIGN, a respected independent auditor specializing in security compliance, confirms Nexo’s adherence to stringent Trust Service Criteria for Security and Confidentiality.
Key Achievements and Certifications
- SOC 2 and SOC 3 Compliance:
- SOC 2 Type 2: This audit evaluates and reports on the effectiveness of an organization’s controls over data security, particularly focusing on the confidentiality, integrity, and availability of systems and data.
- SOC 3 Type 2: This public-facing report provides a summary of SOC 2 findings, offering assurance to customers and stakeholders about the robustness of Nexo’s data security practices.
- Additional Trust Service Criteria:
- Nexo expanded the scope of these audits to include Confidentiality, showcasing a deep commitment to protecting user data.
- Security Certifications:
- The company also adheres to the CCSS Level 3 Cryptocurrency Security Standard, and holds ISO 27001, ISO 27017, and ISO 27018 certifications, awarded by RINA. These certifications are benchmarks for security management and data privacy.
- CSA STAR Level 1 Certification:
- This certification demonstrates Nexo’s adherence to best practices in cloud security, further solidifying its position as a trusted partner in the digital assets sector.
Impact on Customers and Industry Standards
Nexo’s rigorous approach to data protection and compliance sets a high standard in the digital assets industry. By achieving these certifications, Nexo provides its over 7 million users across more than 200 jurisdictions with confidence in the security of their data. These achievements not only emphasize the company’s dedication to maintaining top-tier security standards but also highlight its proactive stance in fostering trust and transparency in digital asset management.
Nexo’s Broader Mission
As a premier institution for digital assets, Nexo offers a comprehensive suite of services, including advanced trading solutions, liquidity aggregation, and tax-efficient credit lines backed by digital assets. Since its inception, the company has processed over $130 billion, showcasing its significant impact and reliability in the global market.
In summary, Nexo’s successful completion of SOC 2 and SOC 3 audits, along with its comprehensive suite of certifications, underscores its commitment to the highest standards of data security and operational integrity. This dedication positions Nexo as a leader in the digital assets space, offering unparalleled security and peace of mind to its users.
Source: blockchainreporter.net
The post Nexo Reaffirms Commitment to Data Protection with SOC 3 and SOC 2 Compliance appeared first on HIPTHER Alerts.
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