Deutsche Börse Group, owners of the German-based Frankfurt Stock Exchange; Swisscom, a telecoms and IT provider; and the Swiss and Singapore-based FinTech firm Sygnum have partnered together to build what they're calling a "trusted and regulatory compliant financial market infrastructure for digital assets." The proposed "ecosystem" will provide customers with issuance and custody solutions, as well as give them access to liquidity and banking services.
As explained in the joint press release, the initiative will leverage distributed ledger technology (DLT) developed by Swisscom to meet the security requirements of financial services institutions and allow for scalability. However, beyond what each company is singularly bringing to the group, the announcement makes it clear that the partnership will take advantage of cross-shareholdings to allow the ecosystem to tap into the needs of customers in the digital asset market.
Swisscom and Sygnum will provide the initiative with its custodial solutions through Custodigit AG, a company founded by the telecom and FinTech companies. As part of the partnership, Deutsche Börse will invest in Custodigit AG, and help support the custodial service as the digital asset ecosystem continues to grow.
Custodigit AG won't be the only company brought along to contribute to the partnership's initiative. Both Deutsche Börse and Sygnum are set to become shareholders in daura AG. According to the press release, daura AG uses DLT to provide a platform for small- and medium-sized Swiss enterprises to issue, transfer, and register shares in their companies. Daura AG's platform will be used to give the digital asset ecosystem's users access to the otherwise unlisted companies.
Lastly, Sygnum will be tasked with providing the ecosystem's banking services, such as deposits, lending, capital issuance via tokenization, and brokerage and asset management. Currently, Sygnum is in the process of obtaining a Swiss banking and securities dealer license from the Financial Market Supervisory Authority (FINMA), Switzerland's financial regulator.
Though the initiative's main drive is to push the evolution of financial market innovation, both Swisscom and Deutsche Börse have their fair share of blockchain-related projects to implement the technology in the financial sector. In September 2017, Swisscom AG announced the launch of its subsidiary, Swisscom Blockchain Ltd., which was working to create a prototype for blockchain-based off-exchange trading. As for Deutsche Börse, the company announced in October 2018 that its BLOCKBASTER project prototype had successfully completed performance tests for blockchain-based settlements of securities transactions, interest payments, and repayments on matured bonds.
As of now, the three companies are waiting for their merger to be approved before moving forward. According to the press release, the partners plan to roll out the digital asset ecosystem's first round of services over the course of 2019.