digital assets & banking: recent market developments and ...€¦ · recent market developments...

Geneva, January 20, 2020

Digital Assets & Banking: Recent Market Developments and Use Cases

Sébastien Dessimoz, Managing Partner, Taurus Group SA

TAURUS GROUP © 20202

AGENDA OF THIS PRESENTATION

1. How did Swiss Banks’ digital asset offering evolve?

2. Where is future growth expected?

3. What kinds of use cases?

4. Why? What are the benefits?

5. When? Is infrastructure ready?


Large Banks

Private Banks

Univ. /Retail Banks

NOT-EXHAUSTIVE

Cash out deposits

Custody

Investment products

Trading/ brokerage

Payment, credit cards

Other (e.g., staking, lending)

Merchant banking / tokenization

Source: Internet; Taurus team analysis based on public information

1. SWISS BANKS IN Q1 2018: SOME EARLY ADOPTERSSwiss banks’ digital asset offering, situation as of Q4 2018


Large Banks

Private Banks

Univ. /Retail Banks

Crypto Banks

1. SWISS BANKS TODAY: MOVING FORWARD Swiss banks’ digital asset offering, situation as of Q4 2019 NOT-EXHAUSTIVE

Cash out deposits

Custody

Investment products

Trading/ brokerage

Payment, credit cards

Other (e.g., staking, lending)

Merchant banking / tokenization

Source: Internet; Taurus team analysis based on public information

Only public activities and projects


2. WHERE IS FUTURE GROWTH EXPECTED?

Source: FINMA, Taurus

Current weight

Payment tokens

Investment/security tokens

Equities

Derivatives

Digital assets

Utility tokens

Debts

Funds

Fiat currencies

Others

Vouchers (ICO)

Virtual currencies

Other assets


2. NEXT WAVE: SECURITIES ARE BECOMING DIGITAL ASSETSBanks & professional investors are mainly interested in tokenized securities

Source: FINMA, Taurus

Current weight

Payment tokens


Equities

Derivatives

Digital assets

Utility tokens

Debts

Funds

Fiat currencies

Others

Vouchers (ICO)

Virtual currencies

Other assets

TAURUS GROUP © 2020 CONFIDENTIAL

ILLUSTRATIVE

3a. CAPITAL MARKET ACTIVITIES STARTEDSample tokenized capital market activities in 2019 by a professional financial institution

7Source: FINMA, Taurus


Equities

Derivatives / structured products

Debts

Funds

Other assets


??

8

3b. INFRASTRUCTURE IS BEING PUT IN PLACE

Depositary 1

Depositary 2

Depositary 3

Investor A Investor B Investor C

Issuer


Issuer

Central Security Depository

Issuer


PRIVATE MARKETS

Distributed Ledger Technology (DLT)

NEW

Source: CMTA, Taurus

PUBLIC MARKETS


??

9

3b. FOR WHAT? WE SEE POTENTIAL IN PRIVATE MARKETSDistributed ledger technology is a next-generation financial market infrastructure for private capital markets

Depositary 1

Depositary 2

Depositary 3


Issuer


Issuer

Central Security Depository

Issuer


PRIVATE MARKETS

Distributed Ledger Technology (DLT)

NEW

Source: CMTA, Taurus

PUBLIC MARKETS

TAURUS GROUP © 2020 CONFIDENTIALSource. Taurus

Regulatory enablers

Technology enablers

Primary market

Secondary market

Post-trade

Issuance TradingClearing,

settlement & custody

• E-ID (CH 2020)• E-Signature• FINMA 2016/7 (online)

• -

• Cloud• Open APIs

• Crowd-funding • DLT/blockchain• Smart contracts

• LIMF• New DLT/blockchain

law

3c. TECH AND REGULATORY ENABLERS ARE SUPPORTING THE REVOLUTIONThis revolution is not only driven by DLT/blockchain technology

Investor / shareholder

services

10


4a. WHAT FOR? BENEFITS FOR BOTH ISSUERS AND INVESTORS

Source: Internet, Taurus

LIQUIDDIRECT DISTRIBUTION

LARGE UNIVERSEOPEN / INCLUSIVE

● Democratized access to unbanked investors

● Democratized access to issuance without underwriters

FAST & EFFICIENT

● Fast & easy issuance● Fast & easy transfer,

24/7/365● Automated post-trade,

corporate actions● e-Voting, e-IDentity

● 24/7/365 trading● Fractional ownership● “Aggregated”

liquidity pools

FLEXIBLE

● Securities tailored at the individual investor level

● Advanced and innovative liquidity scheme

● Lower financing costs for issuers

● Higher returns for investors

TRANSPARENT

● Transparent ownership & transfers

● Live monitoring of corporate actions

● Superior governance

COUNTERPARTY RISK

● Atomic settlement● Combined execution &

settlement● Custody with or without

banks

● Larger investment universe for investors

● Lower ticket size for an investor and diversification


4b. BANKS CAN STILL PLAY A ROLE IN DECENTRALIZED FINANCEBanks aims to play a role in the new economy of decentralized finance, with a specific positioning

Source: Taurus

Retail

Mass affluent

HNWI

Priv

ate

clie

nts

Retail unbanked

Merchants

Pension funds, foundations, etc.

Family offices, IAM, etc

Inst

itutio

nal

clie

nts

Corporate

Funds, asset managers

Insurances

Exchanges, brokers/dealers

Fina

ncia

l in

stitu

tions

Banks

Client segments

Safety

● Bank status● Liability &

responsibilities

One-stop shop

● Consolidated global custody reporting

● One stop shop to buy/sell traditional and alternative assets

Ease-of-use

● No hassle with security

● Platform for issuance or corporate actions

Expertise / advisory

● Crypto-expertise● Investment expertise● Structuring/

underwriting expertise

Typical points of a Bank’s value proposition

Distribution

● Distribution to classical channels

Bridge with traditional finance

● Bridge to fiat currencies (e.g., settlement)

● Bridge to physical assets

12


1. INVESTORS’ SIDEa. Custody/safekeeping b. Transfers/paymentsc. Corporate actionsd. Proxy votinge. Taxesf. …

2. ISSUERS’ SIDEa. Issuanceb. KYC/AML onboardingc. Investor administration

CRYPTO-CURRENCIESDIGITAL-ASSETS

(SECURITIES)

Source: Taurus

4c. FROM SERVICING CRYPTO-CURRENCIES TO DIGITAL-ASSETSCustody of digital assets is much more than sake-keeping and transfer of assets

13


5. CONCLUSION

14Source: Taurus

CAPITAL MARKETS 2.0with digital assets

right time to enter the market

1. Legal & regulatory environment

2. Technology & infrastructure

4. Regulated marketplaces (for tokenized securities)

6. Global standards (interoperability)

3. Professional players & ecosystem

5. Stable coins

digital assets & banking: recent market developments and ...€¦ · recent market developments...

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