in a world’s first for a bank, Sygnum today announced the successful tokenization of its own shares using its in-house tokenization platform, Desygnate. Put simply, this means that digital representations of Sygnum shares, together with associated legal rights and obligations, have been created and are immutably accounted for on a distributed ledger.
Share tokenization: a fully-regulated, highly efficient model to raise capital
With tokenization, Sygnum’s share registry will continuously and automatically update itself whenever capital increases or share transfers occur, allowing the bank to manage primary and secondary market transactions in a fully digital manner. This eliminates the need for buyers to inform Sygnum to manually update its shareholder registry, and does away with lengthy cash settlement processes, thus minimizing counterparty risk. This also eliminates the administrative burden of written form requirements for the transfer of shares between buyers and sellers, facilitating faster and more efficient secondary market transactions.
This strategic milestone was achieved using Sygnum’s institutional-grade tokenization platform, Desygnate. The platform provides corporates a fully regulated, highly efficient and potentially more inclusive model to raise capital as compared to traditional options, such as IPOs. Desygnate has been designed to be fully compatible with the new Swiss DLT law which enters into force from February 2021.
This successful tokenization also lays the foundation for Sygnum to eventually go public. For its future public offering, Sygnum is currently exploring several strategies in its home markets of Switzerland and Singapore, including a potential dual listing with ecosystem partner SIX Digital Exchange (SDX) in Zurich, and also with the Singapore-based digital exchange partnership between SDX and SBI Digital Asset Holdings.
Reimagining client and shareholder engagement models
Aside from the advantages outlined above in handling primary and secondary market transactions, Sygnum will also leverage the smart contract capabilities of its tokenized shares to enable the full potential of stakeholder relationships. For example, Sygnum could reward long-term shareholders and clients with tokenized micro-shares via a micro-shares program, encouraging closer engagement and incentivising them to refer new investors and clients to Sygnum. These shares can be viewed in a consolidated wealth report in each shareholder’s segregated bank account, alongside cash deposits, cryptocurrencies, other asset tokens as well as Sygnum´s settlement token, the Digital CHF.
This demonstrates the potential for distributed ledger technology to add value beyond what traditional securities can provide, transforming clients and business partners into engaged co-owners.