Another stablecoin has entered the world. Swiss-based “crypto-bank” Sygnum has launched a digital Swiss franc, pegged 1:1 to the CHF. As a dangerous virus spreads through the world, the debate about stablecoins is gaining momentum.
Swiss-based Sygnum bank has launched a digital Swiss franc (DCHF). The stablecoin is pegged 1:1 to the Swiss franc and fully covered by a CHF reserve. For every DCHF minted, Sygnum said they would hold the equivalent amount of fiat currency at the Swiss National Bank (SNB).
Sygnum bank is one of the two first Finma-licensed banks in Switzerland that focus purely on blockchain- and crypto-related services. The bank received a banking license late last year, which makes it the second “crypto-bank” in Switzerland besides SEBA bank.
Anyone who wants to buy DCHF can deposit EUR, CHF, SGD, or USD, and the bank will convert it into DCHF via their e-banking portal. Users will also be able to trade and store the stablecoin with Sygnum bank.
DCHF will function as a settlement token in Switzerland’s digital ecosystem
Markus Hartmann, Sygnum Bank’s Head of Tokenisation, said, “The Sygnum DCHF is an integral part of our tokenization offering, facilitating settlement of transactions and execution of smart contract payment structures, for example dividend pay-outs and other corporate actions.”
Through the use of a stablecoin, users can send money in real-time and settle transactions almost instantly. As the money does not go through the banking system, transaction costs are kept at a minimum.
The coin will primarily be a settlement token in Switzerland’s emerging digital ecosystem. Sygnum itself is part of a consortium of members within the SDX blockchain – a blockchain-based trading platform for crypto-assets that is currently being developed by SIX Group – to facilitate fast and low-cost settlement of digital asset transactions.
Thus, the token enables companies and governments to complete transactions in a digital ecosystem without having to take on any currency fluctuation risks that may come with other cryptocurrencies. Sygnum also says that “the settlement token framework and technology developed for Sygnum’s DCHF can be replicated with other major national currencies,” paving the way for the development of other stablecoins.
Stablecoins are gaining momentum in the current environment
The discussion on stablecoins is gaining momentum by the current developments. Sygnums digital franc thus comes at a good time.
More and more institutions launch their own stablecoins, mostly pegged to fiat currencies or a basket of fiat currencies. Just last week, we reported on the Universal Protocol Alliance launching a EUR- and a USD-pegged stablecoin on Liechtenstein-based crypto exchange Bittrex Global.
This comes at a time, where a dangerous virus spreads through the world, with cash being a key transmitter of bacteria and viruses. That’s why the central banks in several countries have recalled cash to clean or eliminate it, to contain the spread of the virus. The Louvre museum in Paris has temporarily banned cash to protect its visitors. This might give electronic payment methods – including stablecoins – additional upwind.
Likewise, several lawmakers in the US Congress are currently supporting the creation of a digital US-dollar to distribute economic aid directly to businesses and people in need. The main advantage of a digital US-dollar compared to fiat currency is that money can be transmitted faster and at a lower cost. It could also reach the underbanked who don’t have a bank account by enabling post offices to set up digital wallets for people without identity documentation.