How Can Traditional Finance Benefit From the 2021 Swiss DLT Law?
2020 is a year that most would rather put behind us, but in its myriad of bad news, came a morsel of excitement from the tranquil valleys of Switzerland. The Swiss Federal Department of Finance initiated a blanked ordinance expected to enter into force on the 1st of August 2021, There will be more to celebrate than just Swiss National Day!
The ordinance, more officially known as the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology will make you able to invest or sell a private company share with just a few clicks. Meaning no need to sign or seek out a notary.
The bill will work by legally recognising three types of digital assets or securities also known as tokens;
Payment Tokens: (ie: Cryptocurrencies) Are token which are intended to be used as a means of payment for acquiring goods or services.
Utility Tokens: Are tokens intended to provide access digitally to an application or service by means of a blockchain-based infrastructure.
Asset Tokens: Are tokens which represent assets, such as a debt or equity claim on the issuer. In terms of their economic function, therefore, these tokens are analogous to equities, bonds or derivatives.
(www.finma.ch/en/documentation/dossier/dossier-fintech/entwicklungen-im-bereich-fintech/)
The latter, as mundane as it sounds, offers the most potential and the largest opportunity. Indeed, it is set to transform the way hundreds of billions of assets are traded yearly: company shares, bonds, debt, funds and any other real asset out there (real estate, infrastructure etc…)
So what’s in it for you?
Whatever corner of the financial market you work in will be touched by these changes, most notably those dealing with the Private Market as this bill transforms the historically illiquid world of real assets into a digital ticket that can be traded at speeds never seen before.
Investment Bankers: Your world is changing, the time and costs you associate with the buying and selling process are expected to drop by 40% as all of the document sending and filing will be done systematically and automatically at a click of a button. The possibility of listing on Digital Exchanges means you should expect a vast increase in trade volume, good thing you’ve freed up all that time.
Asset Managers: Your volumes are growing, second market listings combined with an immutable record of all your holdings will manifest a spectacular increase in trade volumes and market liquidity, things you were unable to offer your clients up until now. Fortunately for you, tokenized assets have inbuilt compliance, meaning there is no option of making a mistake.
Wealth Managers / Private Banks / Family Office: In addition to the increase in volume and reduction in admin time, You benefit from the additional security in preserving your clients anonymity and can arrange liquidity for those who are impatient to cash out and invest in the next big thing you have in store for them.
So how do you prepare and get the upper edge on your competitors?
Take a moment now to book a free consultation with one of our experts that will advise you on the fastest, cheapest and most efficient tips to make your business digital and to take advantage of the new legislation coming in 2021.
