With a joint proof of concept, SEBA, Swissquote, Sygnum, Vontobel and Swisscom “lay the foundation for banking-grade reference prices in the digital asset world”.
Bitcoin and other digital assets are proliferating, but price and volume data sources are susceptible to manipulation.
This damages the image and credibility of the digital asset market as a whole and is hindering institutional adoption. For example, the Securities and Exchange Commission rejected numerous requests to list and trade Bitcoin exchange traded funds citing unreliable reference prices.
Legitimacy
To strengthen the legitimacy of the digital asset space and foster financial innovation Swisscom and the four banks SEBA, Swissquote, Sygnum and Vontobel have piloted what they call the Swiss Institutional Digital Asset Reference Rate (SIDAR).
During a two-week period, the partners carried out daily fixings for Bitcoin and Ether, with the banks contributing data with Swisscom as the calculation agent.
Hence unlike other sources that price digital assets, the SIDAR is based on data from regulated banks and financial institutions, and so, the partners argue, can be used with confidence to create new digital asset-linked products, enabling “a new wave of financial innovation”.
Digital asset market
SIDAR should also serve as a market indicator, reflecting digital asset market interest and activity among regulated participants.
Christopher Thomas, Head Digital Assets at Swissquote Bank says: “Digital assets are an important and expanding theme at Swissquote Bank. As a pioneer of crypto-assets, we are delighted to collaborate with other Swiss banks and continue to strengthen the Swiss ecosystem.”
After the completion of the pilot project, Swisscom is assessing a commercial roll-out with the project’s partners.