Swisscom welcomes Stock Exchange to its cryptocurrency JV

The Swiss Stock Exchange is buying into Custodigit, a digital assets storage facility set up by Swisscom and digital bank Sygnum a couple of years ago.

Swisscom did not disclose how much the stock exchange will invest in Custodigit but said it has “agreed to take a major stake” in the business, where it will work alongside the existing joint venture partners. As of the end of last year, Swisscom held a 75% stake in Custodigit.

Custodigit has developed what it describes as a technical solution for custody of digital assets for regulated financial services institutions. Essentially, it is a storage facility for cryptocurrencies and other emerging digital assets. With the arrival of the Swiss Stock Exchange, known as SIX, the firms plan to build an Institutional Digital Asset Gateway, which covers the whole value chain for investment in digital assets, including trading, smart order routing, settlement, custody and access to secondary markets.

The gateway is designed to enable banks to develop new financial products and services based on cryptocurrencies and other digital assets.

An initial service based on the existing Custodigit platform will be launched in the first quarter of next year, but the partners plan to add more capabilities over the subsequent months. The gateway will build on SIX’s investment – again of undisclosed value – earlier this year in Omniex, a platform for investment and trading in cryptocurrencies and digital assets.

“Digital assets will fundamentally change the financial industry,” said Johannes Höhener, Head of FinTech at Swisscom, in a statement. “By combining the strengths of Switzerland’s leading financial infrastructure providers, we are enabling banks – in Switzerland and beyond – to quickly enter a new financial services era.”

The announcement serves as the latest example of the adjacent digital opportunities available to telcos, should they choose to expand in that way. Doubtless due to its home market’s legacy in the banking sector, financial technology is fast becoming a key area of focus for Swisscom.

The telco’s FinTech unit – including Custodigit and its 29% stake in digital share registry platform daura (that also includes SIX amongst its investors, incidentally) – forms part of its Digital Business division, which also encompasses directories, digital advertising, digital identity operations and drones. FinTech, Swisscom Broadcast, and the cablex network construction and maintenance unit are the main contributors to Swisscom’s ‘other operating segments’ line in the P&L and together they generated 8% of group revenues last year, or 929 million Swiss francs (just over US$1 billion). It’s fair to say that cryptocurrency operations are not a big contributor to the balance sheet. Yet.

But this is a growing area. And with Bitcoin’s value currently flirting with its all-time high, it’s clear why more companies want in to the cryptocurrency and digital assets space in some form or another.

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