The Russian National Settlement Depository (NSD) is looking to launch its digital asset ledger in Switzerland next month.
According to NSD head of innovation Artem Duvanov, it selected Switzerland because of its potential for market-making in digital assets and friendly regulatory environment.
“In terms of laws, [Switzerland] allows the tokenization of at least some kind of securities. That’s the first thing. And it’s favorable for such things because there is market demand,” he stated.
At launch next month, D3ledger will trace the ownership of various assets, including Japanese cryptocurrency Sora, a security token representing unregistered shares in a small healthcare firm, as well as depository notes of Ethererum and Bitcoin, along with other ERC-20 tokens running on the Ethereum blockchain.
“When you say you have some bitcoins in our platform,” Duvanov noted, “you actually have some depository receipts for bitcoins which are held by D3ledger platform.”
That involves “freezing” Ethereum tokens and Bitcoins on public networks through a multi-sig smart contract and then granting rights to the tokens on the D3ledger network developed using Hyperledger Iroha.
“The idea behind D3ledger is a combination of the public network and a private network; slow public network and fast private network,” Duvanov detailed. “This method of holding them is distributed so there is no custody risk like if you store your bitcoins on an exchange.”
Duvanov said the next step is to add a reputable stablecoin to D3ledger to allow OTC trading without counterparty risk as well as delivery-versus-payment of securities trades. “We will include an established connection with some stablecoin, like Gemini coin or some coin backed by dollar or euro,” he stated.
The NSD is following the footsteps of another traditional FMI provider, Deutsche Börse, which also picked Switzerland to trial tokenization.
The Frankfurt Stock Exchange’s parent is cooperating with Swisscom. The “Custodigit” group also includes Singapore-based FinTech enabler Sygnum, custody specialist Metaco, and the platform for digitizing Swiss shares of small firms, Daura.
Switzerland’s national stock exchange, SIX, is establishing its cryptocurrency tokenization and trading shop called SIX Digital (SDX).
SIX said last July that SDX would be in operation in the second half of this year, starting with the tokenization of stocks and bonds and then exploring digital versions of physical assets such as fine art.
SDX will also concentrate on security token offerings, with the chairman of the exchange suggesting SIX might secure some funds itself through an STO.
“There are some proposals for a new law which I think are driven by the SIX project. I am pretty sure because I see proposed changes which are meeting the requirements of SDX. I think the SDX project will drive changes in Swiss law and so everybody will follow,” Duvanov said.
Per a SIX spokesperson, the exchange “is in close contact with the relevant regulators. So I would not call it ‘driving changes in the law’ but rather being the sparring partner in order to help address issues/questions/challenges that must be considered and represented in a potential law.”
Therefore, SIX spokesperson stated that it was “not an unexpected development” that some were going to Switzerland to explore crypto assets in a regulated manner. “The fact that more and more infrastructure providers are moving into this area confirms that we are on the right track.”