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ETH RISK DAY 13.09.2019Martin Burgherr – Sygnum – Chief Clients Officer
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No institutional investor
grade digital assetcustody
No institutionalinvestor grade &
fully regulatedbrokerage
No reliable, fiat-backed
gateway TokenNo scalable tokenization
infrastructure(digital assets securitization)
No onshore regulator approved KYC/AML gateway between fiat and
digital assets
Cumbersome customer
experience(ease of use)
InstitutionalInvestors
RetailInvestors
ServiceProviders
Digital Asset Managers
Blockchain Start-ups
Relevant Regulators
No regulator approved
tax & complianceservices
Lack of trust in digital asset ecosystem
4Source: “Global FinTech Report”, PwC (2017); “The future of financial infrastructure”, WEF (2016); coinschedule.com (2018)
Key value drivers for DLT use cases
Regulatory efficiency improvement
Counterparty risk reduction
Clearing and settlement efficiency
Liquidity and capital improvement
Fraud minimization
77% of financial services companies are expected “to adopt blockchain as part of an in-production system or process by 2020”
90+ central banks engaged in DLT discussions worldwide
77%
90+
Operational standardization
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Sygnum is the world’s first digital asset bank, founded onSwiss and Singapore banking heritage, operating globally
Sygnum empowers institutional and private qualified investors, corporates, banks and other financial institutionsto invest in the digital asset economy with complete trust
The company is the first Swiss digital asset specialistwith an independently controlled, scalable andfuture-proof regulated banking solution
Sygnum’s interdisciplinary team of banking, investment and Distributed Ledger Technology (DLT) experts are shaping the development of a trusted digital asset ecosystem
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B2B BANKING SERVICESAdd regulated digital asset banking service to your business
Enable existing financial institutions to provide regulated digital asset products and services to their own clients.
CUSTODYStore your digital assets with institutional-grade trust
Sygnum’s custody infrastructure, co-developed with Swisscom, is built with a multi-layer security approach enabling clients to invest in digital assets with complete trust
BROKERAGEDigital asset trading
Seamless trading of digital assets through a secure fiat – digital asset gateway.
ASSET MANAGEMENTDiversify
Diversified exposure to an emerging megatrend
TOKENIZATIONManage securities and raise capital more effectively by tokenizing existing assets
The tokenization solution is built to improve the life-cycle management of securities issuance and investment, enabling issuers, such as SMEs, to reduce cost and time spent on raising capital and managing corporate actions
CREDITIncrease liquidity with digital asset lombard loans
Lombard loan products are designed to increase fiat liquidity against digital assets such as Bitcoin
and Ethereum
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7Source: ComplyAdvantage
“… Swiss blockchain sector continues to grow: over 600 companies … located in the ‘Crypto Nation’ and neighbouring Liechtenstein… employs around 3000 people.” Swissinfo.ch, October 2018
“Singapore’s Central Bank Will Aid Crypto Startups in Opening Bank Accounts” CCN, October 2018
“... application of blockchain technology has innovative potential within and far beyond the financial markets.
FINMA CEO, Mark Branson , February 2018
“We recognize the potential that FinTech and blockchain technology offer to the Swiss financial services industry. We have repeatedly demonstrated our commitment to innovation.”
FINMA CEO, Mark Branson, March 2018
For the first time, FINMA has issued banking and securities dealers’ licences to two pure-play blockchain service providers.
finma.ch, August 2019
91. As described in Sygnum “Token Classification” policy; 2. FINMA definitionsSource: MME BCP Framework; Sygnum BCP AML Risk Framework.
Asset Token2 (Asset tokens represent assets)
Utility Token2 (access to an application or service of a blockchain-based infrastructure)
Payment Token2 (means of payment)
BCP class 1 (BCP1) BCP class 2 (BCP2)
Utility/ application: Can be transferred on a decentralized ledger, but do not grant any rights towards a counterparty.
BCP with a native utility, but no right against a counter-
party
Utility Token
Payment Token
Specifics
Asset Token
Payment Token or Asset Token
BCP2 is used in the context of relative rights against a counterparty. A relative right includes a (legal) right to use the BCP generator’s services, to receive a financial payment, to receive an asset or other shareholder rights.
BCP with a relative right context against a counter-
party
Equity (Asset) Right
BCP1
BCP2_E
BCP2_CR
BCP
BCP = “Blockchain Crypto Property”. A BCP is a digital (or crypto) information unit which is functionally equivalent to a property right created through blockchain technology (also called “distributed ledger technology” in a wider sense).
Can be described with BCP
framework
BCP2_CN
Contractual (Asset) Right: By regulated issuer, e.g. central bankContractual (Asset) Right: By non-regulated issuer, e.g. miles and more
BCP2_PayITNo direct mapping BCP2_CustodIT
Transfer instruction tool for fiat book money transfers
Dir
ect1
Ind
irec
t1
Transfer instruction tool for assets in custody, such as art, material goods
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Sygnum proprietaryrisk assessment funnel
Underlying technology
Storage & access
Regulatory
Market
Selected regulatory challenges
Capital adequacy rules for digital assets
Anti-money-laundering regulations- Digital asset screening- Holistic monitoring of digital
asset and fiat flows- Transmitting transaction
information
Risk modelling for digital assets
Market conduct rules
think
discusssolve
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Integrated banking services to securely issue, store, trade and
manage digital assets
Enterprise grade, fully compliant custody solution
Build, load and operate financial market infrastructure
Integrated equity issuance solution
Trusted Distributed LedgerTechnology infrastructure
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− Stable and reliant instrument to participate in the future of fundraising
− Secure tool to pause between periods of cryptocurrency investment activities
− Executing corporate actions in a non-volatile currency
− Risk-free peer-to-peer cryptocurrency payment option
Bank’s competitive advantage
− Bank’s as a highly trustworthy custodian for partners
− CHF as a strong underlying currency globally (safe haven reputation)
DCHF as a solution
− 1:1 backed, collateral-efficient stable coin
− For each DCHF issued, CHF 1 is held in the holder’s fiat account
− National banks remain in control of supply of digital CHF
− Non-decentralized solution held within legally-compliant and supervised ecosystem
Selected use cases
Disclaimer
This document was prepared by Sygnum AG. This document may contain forward looking statements and may be subject to change. The opinions expressed herein are those of Sygnum AG, its affiliates and partners at thetime of writing. The document is for informational purposes only and contains general material. It is for use by the recipient only. It does not constitute any advice or recommendation, an offer or invitation by or on behalf ofSygnum AG to purchase or sell assets or securities. It is not intended to be used as a general guide to investing, and should be used for informational purposes only. When making an investment decision, you should eitherconduct your own research and analysis or seek advice from an expert to make a calculated decision. The information and analyses contained in this document have been compiled from sources believed to be reliable.However, Sygnum AG makes no representation as to its reliability or completeness and disclaims all liability for losses arising from the use of this information.
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