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(Kitco News) – The independent Swiss private bank Cité Gestion, thanks to a partnership with Taurus Technology, is the first private bank to tokenize its own shares under Swiss law.
According to a press release from Cité Gestion and Taurus, “The tokenization of the shares was carried out according to the standards implemented by the Capital Markets and Technology Association (CMTA), a Swiss non-profit organization based in Geneva, whose purpose was established is to encourage the use of new technologies in traditional capital markets.”
The private bank, founded in 2009, has partnered with Taurus, a company specializing in providing digital asset infrastructure for banks to tokenize their shares, manage the smart contract that creates the shares, and carry out asset management of its securities, the statement said.
“Our vision at Cité Gestion is to enable our clients to fully exploit the technological advances in the capital markets and in particular the enormous rationalization and efficiency potential that distributed ledger technology offers in this area” said Christophe Utelli, Deputy CEO of Cité Gestion.
Tokenization is the process of digitizing an asset and is growing in popularity among financial institutions as it allows players in traditional finance to integrate blockchain technology and attract more investors. “Taurus believes that the digitization of personal wealth and securities will become the new standard in the digital asset industry,” the company said in the statement.
Cité Gestion’s tokenized shares were created using the CMTAT — an open-source smart contract published by the CMTA and dedicated specifically to the tokenization of securities — and recorded on the Ethereum blockchain, the statement said. The Swiss law firm Lenz & Staehelin advised on the transaction on corporate law and regulatory aspects.
“It was important for our bank to be one of the first to use the new possibilities of Swiss law to digitize securities by tokenizing our own shares,” said Utelli. “As a robust, open-source, and industry-supported framework, the CMTA standard was a natural choice for tokenization. Taurus and the application of the CMTA standards ensure that an appropriate risk management framework is at the heart of the process.”
Tokenization is a trend that has gained popularity in recent years as institutional investors and the general public have learned more about the possibilities of blockchain technology.
According to Sebastien Dessimoz, co-founder and managing partner of Taurus, the company was involved in the tokenization of 15 companies last year, covering equity, private debt and structured products from Swiss and European firms. Almost half of the companies involved were institutional or regulated institutions. “We believe that 2023 will mean a fundamental change in the industry and we are ready to support private companies in this step,” said Dessimoz.
The results of a study conducted by BNY Mellon in late 2022 showed that 91% of institutional investors are interested in investing in tokenized products, but want to do so in a safe and compliant manner. Additionally, 97% of respondents said tokenization would “revolutionize asset management” and “be good for the industry,” citing improvements such as faster settlement times, increased liquidity and better access for all investors to asset classes like private equity -Funds and real estate.
Banking institutions are also jumping into the tokenization trend, with JPMorgan conducting its first live trade on a public blockchain last November. Singapore’s DBS Bank and Japan’s SBI Digital Asset Holdings have partnered with JPMorgan to execute FX and government bond transactions against liquidity pools composed of tokenized Singapore Government Bonds, Japanese Government Bonds, Japanese Yen (JPY) and Singapore Dollar (SGD) exist.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of the author Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and/or damage resulting from the use of this publication.
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