Source: Finews.ch | Author: Samuel Gerber
Bitcoin and sustainability: Do they go together?
Both digital and sustainable investments are booming. Together they offer the Swiss financial centre immense opportunities – a pity that bitcoin & co are energy guzzlers. Or is there an alternative?
Since Tesla founder Elon Musk switched $ 1.5 billion of his company money to bitcoin, the waves have been rising. Critics consider it unforgivable that the electric car pioneer is investing in a digital currency whose protocol consumes as much electricity as the whole of Switzerland.
Up to six weeks waiting for crypto accounts
That should give food for thought in the Swiss financial centre. Because both digital tokens and coins as well as sustainable investments have gained massively in importance here in recent months. Bitcoin, the most important crypto currency, climbed above the 50,000 dollar mark recently, which is causing business in the local “Crypto Valley” to explode. With the Bitcoin Suisse broker, new customers now have to wait up to six weeks before they can open an account.
At the same time, Switzerland has achieved top marks in global ESG rankings. In the summer of 2020, the volume of assets invested sustainably by Swiss players had risen by 62 percent year-on-year to CHF 1,163 billion. 38 percent of all funds traded in Switzerland meet sustainable standards. Even the world’s largest asset manager Blackrock is now teaming up with the major bank Credit Suisse (CS) to tap into Swiss sustainability know-how.
A huge business case
A direct bridge to sustainable investment products – such as “green” bonds and emission rights – and the crypto world has not yet been built. But in this regard there are already the first simulation games in the blockchain scene. Stijn Vander Straeten, CEO of the storage infrastructure and the tokenisation business at the Swiss fintech Crypto Finance AG, knows about this.
He sees in tokenisation – the transfer of stock rights to the digital blockchain – extremely interesting applications for sustainable investments. “Using smart contracts, for example, a digital bond could be designed in such a way that a company pays more coupons if it does not adhere to certain sustainability standards.”
However, Vander Straeten points out, this would require independent testing to set and monitor these standards. In the ESG area, the expert continues, this is generally a problem today. There is a lack of recognised regulations and indices that can be used as a yardstick. “But once these are in place, it’s a huge business case.”
Tokenisation on the verge of a breakthrough
Behind the scenes, work on the tokenisation of traditional securities is progressing rapidly, as the financial manager reveals. For example, Crypto Finance is supporting major European banks in pilot projects; the Swiss company is providing the infrastructure for the custody and administration of the securities tokens. “In six to 18 months, we will see the first products on the market,” Vander Straeten is convinced.
“The future will certainly bring tokenised ESG financial products,” says Vander Straeten. “However, both topics are associated with corresponding complexity and regulatory consequences, which for the financial industry means above all: it will take more time.”Read more