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Interviews

Michael Stiegelmeyer, COO & President of Planet Digital Partners – Interview Series

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Michael Stiegelmeyer, COO & President of Planet Digital Partners - Interview Series

Michael Stiegelmeyer is the President and COO for Planet Digital Partners. Since 2013, Mr. Stiegelmeyer has served as CEO of The 1441 Group, LLC and ZAGS, LLC. The 1441 Group, LLC is a business development and sales company focused on development sales and marketing for toy, video games, CE, sporting goods, and other consumable products in the U.S. ZAGS, LLC is a distribution sales company focused on opportunistic general merchandise sales with key U.S. retail accounts throughout the U.S.

 

AT: Can you tell us a little bit about Planet Digital Partners and the team behind it?

MS: Planet Digital Partners is a licensed publisher of console video games for Sony PlayStation, Microsoft Xbox, and Nintendo Switch.  We operate most closely to an accelerator, as we partner with studios to take content or concept from start to finish, placing it in the market both physically and digitally.  Our team is comprised of industry veterans who have held executive positions at some of the largest publishing, manufacturing, and distribution companies in the video game industry- including the former CEO of Take Two, the former President of PlayStation Europe, the founders of Saber Interactive, and the founder of Jack of All Games.   We have assembled a team of people who have made video games very successfully for a long time. This ability to develop and deliver great consumer experiences is the core strength behind PDP.

 

AT: Why issue a security token versus raising via a traditional venture fund?

MS: We believe that digital securities represent a game-changing investment opportunity that will have huge impacts beyond our STO and through all markets.  We feel the flexibility of a token offering versus going the VC route, allows our core group to retain the structure of decision making, provides liquidity for the investor, and allows us to give greater creative control to our studio partners.   That combination of factors fit perfectly into our vision of a democratic, collaborative entity that is PDP.

 

AT: RKT owners stand to receive a percentage of the net profits, can you share with us some details on this profit distribution?

MS:  The structure we are offering to investors is to return 80% of all NET divisible revenue to the point at which RKT Token investors are whole.  At that point and moving forward, we will return 40% of NET divisible profit to the RKT tokens.

 

AT: What console or streaming service will these games be available on?

MS:  Our games will be available on Nintendo, Sony, and Microsoft console or handheld platforms, as well as Steam, IOS, and Android.  The platform mix will vary game by game, based on the validity of the content offering by format.  For example, we may release a title only for Nintendo Switch, based on the user experience and and/or platform user base.   We want to keep very ROI focused in releasing titles, versus trying to blanket all platforms on all titles.  Luckily, we have enough people in decision-making positions who understand this approach and have been very successful in releasing content in a targeted fashion.

 

AT: Will these games be based on pre-existing IP, or will these games be developed from scratch?

MS:  Planet Digital Partners will release a combination of new releases based on pre-existing IP as well as completely new IP.  This balance of ‘tried and true + brand spanking new” is part of the DNA when it comes to crafting our portfolio.  We understand that there are legacy brands that can deliver terrific sales and ROI if delivered through a new experience with familiar notes throughout.  An example of this type will be when we release Cooking Mama in the back half of 2019.  Cooking Mama is a brand with 14MM copies sold over its iterations life to date- and we will release this for the first time on Nintendo’s Switch platform exclusively this fall.  The pedigree for success is there and the experience of the game is perfectly suited to Switch and the Joy-Con controller system.  On the other side, we will be looking to bring brand new IP from award-winning studios to life. There is a tremendous amount of compelling content being built through the vibrant Indie community that simply needs an accelerator-styled boost from a partner like PDP.

 

AT: The whitepaper states that the business plan is to invest in games in the $10,000,000 USD range versus the blockbuster offerings by larger entities such as Electronic Arts or Activision. What’s the mindset behind this decision?

MS: The mindset there is that we see a hole in the publishing fabric, where compelling IP- as mentioned above- never gets a green light or only goes to market in a limited, digital fashion.  The large, institutional publishers are focused on projects with massive development and marketing budgets.  Those projects can potentially deliver the massive revenue needed to move the needle with their share-holders, and they are often built around pre-existing relationships and commitments. So, we see that there is a supply of solid content that will resonate with consumers that needs an infusion of support and guidance to be optimized.   By focusing on projects that require a modest amount of investment, and doing so through an extremely lean organization, we can build to-market sales systems that deliver meaningful ROI, which provide better delivery back into the RKT token.   The independent community creating video games is stronger than it has ever been- we want to enable the star projects within that community to shine.

 

AT: Will any of the games be using the freemium model, whereby users can play for free but then pay for upgrades?

MS: Right now ‘freemium’ is not what we are focused on.  The success stories are there for everyone to see, but our focus is on delivering great gaming experiences within the box, so to speak.  We also think the gaming community is starting to feel a little worn out by micro-transaction.  Maybe that makes us ‘old school’, but that is what the brand is about.

 

AT: What’s the timeline from prototype to final release of the initial games?

MS:  Every project is different, but for our games the typical development cycle is 12 to 16 months, end to end.  For PDP we are bringing in a handful of ‘baked’ projects which will allow us to begin releasing games in 2019 and delivering to investors in early 2020.

 

AT: The whitepaper states that the blockchain will be used in these games, could you elaborate on this?

MS: Our plan is to deploy simple blockchain applications into the actual games, where it makes sense and makes the experience more compelling.  One example would be in the use of blockchain private-keys.  Private-keys can be assigned to each copy of the game, giving that user a unique ID.  These keys would make each game subtly different and personal to the user by building an optional feature in the menu settings that allows the private-key to change the expression algorithms for characters, non-playable characters, enemies, terrain or items in the game.   So essentially, each copy of the game can deliver a unique variation of the experience to each user, and can result in rare ‘mutations’ at varying rates.   We believe gamers will get a huge kick out of this type of individualized experience and will want to share these unique expressions and ‘mutations’ within the community.

 

AT: Is there anything else that you would like to share about Planet Digital Partners Inc?

MS: We are just really excited to be bridging the worlds of digital securities and video games.   We see a tremendous opportunity for investors, developers, and, ultimately, the gamers we want to build great products for.  Now that the STO has begun, our focus will be on successfully closing our raise, engaging our investor base, and then making the very best video games we can in the most innovative ways possible.

 

Thank you for the fantastic interview. Anyone who wishes to learn more can visit the Planet Digital Partners Token Listings Page or the Planet Digital Partners Website.

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Antoine Tardif is the founding partner of Securities.io, the CEO of BlockVentures.com, and has invested in over 50 blockchain & AI projects. He is the founder of Unite.AI a news website for AI and Robotics. He is also a member of the Forbes Technology Council.

Interviews

Rob Viglione, CEO and Co-Founder of Horizen – Interview Series

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Rob Viglione, CEO and Co-Founder of Horizen - Interview Series

Rob Viglione is the Team Lead and Co-Founder of Horizen, a blockchain platform that aims to enable an application-rich and inclusive ecosystem through its leading-edge sidechain solutions. Formally a trained physicist, mathematician, and military officer, Rob’s experience working on satellite radar, space launch vehicles, and combat support intelligence informed much of his understanding of how blockchain technology could change the trajectory of global societies.

You’ve been involved in blockchain since the early days. How did you initially get introduced to the technology?

Slashdot ran an article highlighting Bitcoin’s dollar parity in 2011 that grabbed my attention. As someone who was increasingly concerned about imbalances in the global financial system, Bitcoin seemed the perfect experiment in creating free market money for the digital age.

When did you first realize that you wanted to contribute to blockchain and cryptocurrency?

Like many others who were enamored with Bitcoin in the early days, once I started diving in and putting my money where my ideological mouth was, I couldn’t help but want to be an active part of the financial revolution. It was much too exciting to passively watch on the sidelines! The first thing I could think of at the time was offering tutoring in physics or math for Bitcoin, but oddly enough there wasn’t much of a market for that! I ended up actively involved by hosting educational meetups in Afghanistan while I was deployed there. This early experience shaped my views of where crypto can have the highest marginal impact on welfare, mainly in less stable and more politically volatile parts of the world.

You’ve been involved in many early projects such as Bitshares, BlockPay, Zclassic, Seasteading and Bitgate. What were some key lessons that you learned for what will or will not work in the marketplace?

There were so many lessons to be learned! The biggest is the value of resilience and building a strong team that can work through the crazy volatility that is crypto. This industry goes through extreme volatility and all-too-frequent hype cycles that can easily distract projects from core missions and laying solid foundations. The challenge is to keep focus on the long term, while incorporating scant, but valuable, signals from a deluge of noise in the periodic manias, but mainly to stay alive long enough to deliver real value!

What was your inspiration for launching Horizen?

I originally co-founded Horizen as a hobby project while wrapping up my PhD dissertation, it was never meant to explode like it did. There were two contributions we wanted to make to the Bitcoin ecosystem, and launching our own experiment seemed the best approach to just get things done quickly. The first part was to bring sustainable economics to crypto, the main idea being that there are many different kinds of stakeholders that contribute to the success of a decentralized ecosystem and sustainability means everyone needs to be compensated on the margin. The other big idea, and the one that people mainly associate with Horizen, is in scaling privacy.  We now live in a world where data has exponentially increasing value, and people are waking up to the reality that they’ve inadvertently signed up to the Faustian bargain with big tech to give up all semblance of privacy and rights to their own data in exchange for platform usage. Our insight is obvious: there’s no reason to think of these things as mutually exclusive, and there’s a multi trillion-dollar market for building tech ecosystems where people control their data and retain their privacy.

Could you tell us what is Horizen is and why it matters?

Horizen is the world’s largest network of interoperable blockchains focused on user and application privacy that scales. The ecosystem is set to disrupt big tech platform business models in that users control their data, can elect full privacy, and directly participate in the network’s totally decentralized infrastructure. This matters more than ever in a world that’s waking up to the reality that data has real and exponentially increasing value, and privacy has been unacceptably violated at all levels of our digital lives.

In July 2020, the beta release of Zendoo, a decentralized and customizable sidechain solution was launched. For readers who are not familiar with what a sidechain is, could you define it in non-technical terms?

A sidechain is a parallel blockchain that is interoperable with another chain. Zendoo is Horizen’s blockchain interoperability protocol, and it allows developers to launch their own fully customizable blockchains that are interoperable with the Horizen network, gain the economies of scale the network affords with its large infrastructure, and it comes with a sophisticated cryptography toolkit for user and application privacy. What makes Zendoo special is that it is the first totally decentralized sidechain protocol in the blockchain industry.

How does the Zendoo sidechain compare to what is currently in the marketplace and how does it enable businesses and developers to affordably create private or public blockchains?

Zendoo is the first totally decentralized sidechain protocol in the blockchain industry, which means it does not require trusted parties to validate transactions between chains and thus has security that scales. Another important difference from earlier sidechain systems is that Zendoo is an asymmetric protocol in that the main Horizen blockchain does not need to know anything about any sidechain, but sidechains need to closely track the main blockchain. In this way, developers have full freedom to customize their blockchains without requiring any changes in the Horizen mainchain, which would become a limiting permissioning bottleneck on growth.

Could you tell us about ZEN and what benefits it provides holders?

ZEN is both the transaction currency and the utility coin for the Horizen network. The coin aspect is just like Bitcoin in that there’s a limited supply that will ever be released, emission is totally decentralized where work must be performed to obtain it, and with Zendoo, ZEN also has use as a sort of transaction “gas” for the application platform. There’s a unique value proposition here in that ZEN holders get the supply limitations of Bitcoin with a utility demand similar to Ethereum.

Is there anything else that you would like to share about Horizen? 

There’s a growing awareness in tech that ecosystems require community over customers, and that’s exactly how we’ve been thinking of our users from day one. Horizen is a community startup that happens to use blockchain technology to meet its mission and to disrupt what’s a multi trillion dollar industry in need of disrupting. Our notion of community starts with core intangibles like respect, inclusion, and transparency that have thus far laid the foundations for such a strong, cohesive, and positive community that is exploding.

Thank you for the great interview, readers who wish to learn more should visit Horizen.

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Digital Securities

Baxter Hines, Author of “Digital Finance: Security Tokens and Unlocking the Blockchain” – Interview Series

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Baxter Hines, Author of "Digital Finance: Security Tokens and Unlocking the Blockchain" - Interview Series

Baxter Hines, CFA, is managing partner with Honeycomb Digital Investments. He co-founded the firm in 2020 to provide income producing solutions for clients. His firm manages portfolios consisting of traditional assets, security tokens and digital assets.

His new book “The Digital Finance Book: Security Tokens and Unlocking the Real Potential of Blockchain“, is currently available to be pre-ordered at all major on-line retailers globally and will be in stores on November 17th, 2020.

What initially attracted you to blockchain and digital assets?

I spent an extensive amount of time looking into cryptocurrencies initially because I was so curious as to what the buzz was all about and after learning as much as I could about Bitcoin and cryptos I sought to gain a deeper understanding of the underlying technology, its capabilities and real world applications.  It was at this point that I came to realize that blockchain is so much more than simply Bitcoin. It became obvious to me that this innovation would impact the transfer and management of assets such as stocks, real estate, bonds, private securities, intellectual property and much more.  Placing real-world assets on the blockchain can lower costs of capital and that feature alone will cause eventual widespread adoption. When that idea sank in, I knew I wanted to learn as much about blockchain and digital assets as I could.

You’re a managing partner with Honeycomb Digital Investments, an investment firm that manages portfolios consisting of traditional assets, security tokens and digital assets. What are the things that you look for when reviewing investment opportunities?

I spent twelve years as a portfolio manager at NFJ Investments (a subsidiary of Allianz Global Investors) focused mainly on stocks with an emphasis on dividends. I bring that mindset to the digital asset space in that I seek out investment opportunities that I believe will capture the benefits of the upcoming growth of blockchain technology and its underlying ecosystem. Specifically, Honeycomb looks to invest in companies that are building the platforms and infrastructure to support the megatrend of blockchain and those cryptocurrencies and projects which will also be a part of the underlying ecosystem.

How would you personally describe what security tokens are?

Simply put, security tokens are a digital representation of real ownership in an asset – in most instances, one token is equivalent to one share in an asset. Security tokens are a digitized title to a financial instrument combined with the agility and speed of blockchain. Security token holders are entitled to certain rights and privileges of an underlying asset just as they would be if they owned the asset outright.

By building on top of the blockchain, security tokens offer capabilities, features and innovations that would never have been possible in a world of paper certificates. We are truly at the dawn of a new digital age in finance! Some of the brightest financial, technological and legal minds of today are working feverishly to develop the potential of this reliable, consistent, safe and consumer-friendly method of doing business. The future potential of these technologies is massive and the growth will occur over many, many years.

One factor that distinguishes security tokens from cryptocurrencies is that they are more regulated instruments. Tokens can only be released after meeting stringent legal and compliance hurdles providing investors with certain protections. Because of the programmable nature of the blockchain, security tokens can include features to automate servicing, embed compliance and enforce contractual obligations.

Not only do security tokens contain regulatory safeguards; but also, they provide investors with two major additional features: cost saving efficiencies and the potential to create enhanced liquidity. Process automation brought about by the blockchain will allow for security tokens to provide greater functionality, lower costs, faster speeds and increased transparency to financial markets. These aspects should ultimately lead security tokens to have lower costs of capital than their traditional paper alternatives.

Security tokens have been a bit slower to take off than most of us expected, in your opinion what are the reasons behind this?

Three major factors are holding security tokens back from wide-spread adoption: regulatory uncertainty, lack of education and first mover hesitation. The benefits of digitization are significant and eventually projects will have to go on the blockchain just to stay competitive. But before a takeoff in demand can occur, these three issues must be resolved.

Regulatory certainty has begun to arrive and technology is matching what is needed for this digital future.  Jurisdictions like Singapore and Switzerland are taking a clear approach to how they want to govern security tokens and their leaders have noted digitization to be the path to a better and safer financial future. It is my opinion that larger economies such as the United States, the European Union and Japan will likely eventually follow and simply refine the earlier established frameworks. Once the financial community sees the incredible benefits digitization has to offer, other countries will be fast to adopt digital-friendly laws so to reap the subsequent rewards.

Second, for security tokens to grow and flourish, the market and all of its constituents need to be further educated. Security token usage will be a growing trend in the market; but to realize the full potential, certain terms, concepts and a better understanding of the functions and benefits of blockchain must be realized by all of the players in the financial services industry including retail

investors, those employed in the financial industry, market regulators, and entrepreneurs trying to issue securities to raise capital. Hopefully my book can help out on this front!

Finally, we need more traditional financial services players and issuers to bring high-quality projects on the blockchain. Asset classes with higher frictions around trading are prime candidates for early adoption. This includes fixed income, real estate and private equity investments. We have already seen several pioneering projects in these spaces gravitate towards the blockchain. Many other projects are sitting on the sidelines today, waiting in anticipation to see how the first movers to blockchain fare. As these initial projects that have already digitized prove themselves to be safe and legally compliant, a new group of followers will jump in. Like the old saying goes “Nobody wants to be first to a party, but nobody wants to be last!”.

Are there any current security tokens (digital securities) which you are bullish on?

Without getting into specifics, I must say that I can say that I am bullish on the benefits of security tokens for the financial services industry as a whole – in particular the benefits this technology will have on the underlying investors and such investors ability to better gain access to liquidity when it comes to certain asset classes.

You recently wrote a book on security tokens and digital securities called “Digital Finance” which is set to be published in November 2020. What inspired you to write this book?

After extensively researching blockchain and its “better, faster, and cheaper” nature, I realized our financial system is on the verge of a massive transformation. Blockchain technology is the solution to spearhead the next generation of financial market infrastructure and blockchain may be the most important innovation since the internet.

While most people are aware of Bitcoin and other cryptocurrencies, few realize the far greater potential of blockchain. Blockchain has already proven itself to be an incredible means of exchanging value and information – but there is so much more to offer! My book examines how this powerful technology can overhaul our current financial infrastructure in a way that will increase efficiency, transparency, and security.

I wanted to publish a non-technical, easy to understand primer on blockchain and security tokens that would be relatable and practical for those in the financial industry. John Wiley & Sons seemed like the perfect publishing partner to assist in realizing my aim of producing a clear and concise framework on how to think about investments in the digital space. My goal with the book is to help readers uncover how blockchain and distributed ledger technology are disrupting the financial industry in an easy to understand and non-technical manner.

In your book you will be discussing case studies, historical perspectives and latest trends. What are some of the case studies that are discussed?

One of the book’s objectives is to make sure the reader can truly connect with the subject matter and as a result, the work contains many case studies, historical perspectives and latest trends to bring key concepts across. “Digital Finance” focuses on three major areas of digital assets: cryptocurrencies, stablecoins (like Central Bank Digital Currencies or other digital representations of money like the US Dollar or Euro) and security tokens. It is important that the reader get accustomed to real-world illustrations from all three of those fields. The book covers cases like Facebook’s Libra project building a global blockchain-based platform for cryptocurrencies and Britain’s Royal Mint creating a digitized way to own gold in its vaults. As security tokens are the main topic of the book, most of the examples focus on how blockchain can affect stocks, bonds, private equity and other alternative asset classes. As a result, examples such as the World Bank’s Bond-i, the Aspen St. Regis’ hotel token, and NBA player Spencer Dinwiddie’s professional athlete investment token (PAInT) are covered in detail. There is also considerable attention placed on projects that large established corporations such as IBM, HSBC, Goldman Sachs and the Singapore Exchange are undertaking to build a new blockchain-based infrastructure that will run our financial markets in the coming years.

The book also contains numerous examples from history that provide a framework on how to think about the upcoming rise of digital solutions. Through my research, I have noticed a striking similarity between the Internet Age of the 1990’s and the adoption of blockchain. By looking at the growth of the Internet from a historical perspective, one can gain a glimpse into what will unfold as blockchain becomes a bigger disruptive force.

What do you believe needs to happen to accelerate the pace of adoption of digital securities?

The move to a blockchain-based financial system will unfold one step at a time albeit in a quick manner with the most basic levels of finance developed first. As a result, payment systems will be at the forefront of digitization in the coming years and digital currencies will be a powerful force that will later aid in the growth of digital securities.  The main reasons for gravitating to digital securities from their paper-based alternatives are largely two-fold: lower costs and enhanced liquidity. Without a digital payment mechanism in place first, security tokens will not be able to fully capture those benefits.

Cryptocurrency and stablecoins representing a national currency like the U.S. dollar have been the typical gateway people use to first experience digital financial products. Today, we are seeing many countries float the idea of a blockchain based national currency; the list includes the world’s largest economies such as China, Brazil, France, Canada and the United States just to name a few. If government entities around the world begin to formulate legislation that will allow for currencies to become digital in a legally compliant manner, this would be huge for digital assets in general. The move would certainly encourage people to further explore utilizing digital financial products and would provide an amazing amount of comfort in doing such.

Not only will national digital currencies facilitate adoption but also, they will clear hurdles for further regulatory reform. After creating a digital currency, government entities will have already had discussions around blockchain, its safety and the infrastructure that is needed to flourish. Leaders will then be more likely to debate further initiatives such as digitizing securities like stocks or bonds.

Liquidity around a digital security or security token is much easier once a digital currency is in place. Whenever a security token is bought or sold, it needs to have a digital currency on the other side of the trade to fully reduce frictions and allow for instant settlement. If the cash systems of today are used in that process, the trading aspects of security tokens will still be much slower than they can be. As a result, government entities will need to first focus on payments and central bank issued digital currencies in order for the pace of adoption of digital securities to really take hold.

Is there anything else that you would like to share regarding your book ‘Digital Finance’?

I think it is important for people to have a perspective as to just how big this wave of tokenization will be.  Digital assets and security tokens are going to be a major factor in the future of capital markets and will represent the first new asset structure in roughly 30 years! The last new product with even remotely the same scale and effect was the ETF. This upcoming blockchain breakthrough will have a profound impact on the way we trade securities, how shares are maintained throughout their life cycle and even influence the ways we invest our money. This innovative process opens up the possibility of unlocking trillions of dollars in assets to new investment!

There are more and more signs that digitization will help to transform the traditional investment business model of today into a modern, fair, transparent and distributed marketplace. This new paradigm will connect investors and the projects they invest in directly with blockchain based platforms. Just recently, the first regulated security tokens have gone to market. We are at a point in time where more regulatory certainty has arrived and technology is being developed to match what is needed for this digital future. Everyone in the financial industry will need to have a broad comprehension of how the technology works, what it can affect and what consequences this could have for business.

The pace of development in this industry is remarkable. Almost every day I see another groundbreaking story that gets me excited. As a result, I’ve started a Twitter account for the book which highlights articles covering the hottest topics of the day. The purpose of this page is to aggregate the most important stories at a given time and put them into a one stop location for people to see the incredible milestones that digitization is hitting! Be sure to follow us on Twitter for the most important news!

Thank you for the fantastic interview, I enjoyed learning about your views on digital securities and the future of the industry.

Readers who are interested in learning more should know that the book is currently available for pre-sale at all major on-line retailers globally and will be in stores on November 17th, 2020.

Book Website

Book on Amazon

Follow the Book on Twitter: @digifinancebook

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Interviews

Peter Hofmann, the CEO of Custodigit – Interview Series

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Peter Hofmann, the CEO of Custodigit - Interview Series

Peter Hofmann, the CEO of Custodigit, a joint venture between Swisscom and Sygnum offering an investor-grade custody solution targeting regulated financial institutions.

Peter is also a Board observer at Metaco SA and a mentor to London & Partners. He has worked in a different senior position in the financial service industry for companies like Cap Gemini, KPMG, IBM, PostFinance and several startups before.

He has a long-lasting experience in the interception between financial services, technology and innovation in different roles.

Custodigit was founded by Swisscom and Sygnum in 2018. Could you begin by detailing who Swisscom and Sygnum are? 

Swisscom AG is a major telecommunications provider in Switzerland with its headquarters located in Bern. 51% of Swisscom is owned by Swiss government. Swisscom actively supports the fintech space in Switzerland and believes that financial industry will change significantly in the next 10 years due to emergence of disruptive business models in fintech start-ups. Swisscom wholeheartedly believes that in the future financial sector will rely heavily on usage of artificial intelligence in combination with blockchain technology. Swisscom owns 75% of Custodigit.

Sygnum is the world’s first regulated Digital Asset bank headquartered in Switzerland and Singapore and operating globally. Sygnum has received its Swiss banking license in September of 2019 and the bank enables its clients to invest in digital assets in a secure and convenient way with a complete trust. The services provided by Sygnum include institutional-grade custody built by Custodigit, with a fiat-digital asset gateway, brokerage, B2B banking services and lombard loans. On 18th of September 2019, Sygnum’s first customer transactions were publicly recorded on the two most important blockchains, Bitcoin and Ethereum.

You’ve been a Senior Manager at Swisscom since 2009. Why did Swisscom believe that the time was right to enter the custody space and launch Custodigit?

Swisscom has been perusing the digital asset space already for several years. In 2017, we have all witnessed the rising demand in the crypto currency space, the ICO boom and stagnation of the market in the beginning of 2018. Even though, the space was not regulated, it has clearly depicted the capabilities of technology and how it could simplify our daily lives. Swisscom and us, we strongly believe that future lies within the digital asset space and by 2027 digital assets will represent a paramount chunk of global GDP. In addition, we see rising interest from financial institutions such as banks and asset managers who would like to enter the digital asset space. In Germany, BAFIN with its current regulatory initiatives acts as another trigger point for the market as well. As far as we heard more than 55 players expressed their interest in the new Crypto license. If we analyze the current digital asset financial market infrastructure we observed that there is a lack of institutional grade market infrastructure and inefficiency. Custodigit’s vision is to support the set-up of an institutional grade market infrastructure for crypto currencies as well as tokenized assets.

Custodigit provides secure access to and storage of digital assets through an institutional investor-grade custody solution. Why is this important for financial institutions?

Institutional investors continuously express their interest in digital asset space and several banks have started taking steps that would enable them to provide their clients with crypto offering. The custody and trading part has always been a challenge for financial service providers. Custodigit provides an institutional grade ‘Bank in Box’ platform to regulated financial service providers, so that they are able to offer Crypto Currencies as well as Digital Assets to their customers without high up-front investments and a short time to market. For financial institutions it’s important that they have the necessary functionality in order to run their business processes (e.g. Settlement) in an automated way to ensure efficient, secure and compliant business process. In order to reduce their supplier risks, financial institutions need an enterprise ready platform which is audited and provided and operated by a trustworthy and stable organization. This is exactly what Custodigit is providing together with Swisscom who is very experienced in operating highly security sensitive banking infrastructure.

Could you discuss some of the cybersecurity risks that currently exist for digital asset custody solutions?

There are various cybersecurity risks associated with digital assets and two of them are highly imperative to take into account.

  • Storage of private keys: Numerous crypto enthusiasts store their private keys on their laptops. It is easy for hackers to access this information and once the key is stolen, it is impossible to get the funds back. Once you lose your key, you lose your investments permanently.
  • Exchanges being hacked: Currently majority of crypto exchanges are not regulated and due to that they do not have same level of governmental oversight and auditability as traditional regulated institutions. During the past several years, numerous exchanges have made headlines because of security breaches. Coincheck had more than USD 550 million worth of crypto stolen by hackers. Bithub lost around USD 30 million of its clients digital asset holdings. Custodigit is working closely together with security and audit experts in order to provide an institutional grade Digital Asset platform and is using the proven infrastructure of Swisscom.

What are some of the measures that have been taken by Custodigit to protect clients from these cybersecurity risks?

At Custodigit, we take the matters related to security very seriously. Custodigit spared no time and energy to define an end-to-end security framework developing a holistic view on risks and systematically designing redundant countermeasures. Wherever possible, Custodigit adopted the highest security standards and went an extra step to have its procedures and infrastructure audited (ISAE certification). As a company, we are obliged to comply with Swisscom’s strict security framework. The policies we have in place ensure that no individual, team or organization is able to compromise the security of the assets: strict segregation of duties and responsibilities, minimum 4-eyes check for all critical activities, regular controls of personal activities and backgrounds, different cryptographic libraries for addressing risks associated to zero-day attacks.

Each transaction is approved by multiple individuals or groups of individuals.

Could you discuss some of the key core features that are currently available to Custodigit clients?

We would like to emphasise that our target market is regulated financial institutions such as banks, exchanges etc and our platform offers all the required business functionality to provide a digital asset market service offering. Our platform enables the clients to buy, sell, transfer in / out digital assets (end-to-end). It can be integrated with any core banking system. In addition, we support smart order routing to various liquidity providers such as brokers and exchanges. From security perspective, the security system is audited with ISAE 3402 and 3000 and ISO 27001 and 2000 certificates. Currently we support following digital assets – BTC, ETH, XRP, BCH, ERC20. Our platform can be white labeled with adaptable user interface and APIs or available as a SaaS service.

What are some of the clients or banks that you are able to discuss that currently use Custodigit custody solutions?

As you are aware, currently we have bank Sygnum as a client. They are using our full solution including custody and brokerage. We are currently in negotiations with other regulated financial institutions located in Europe. Unfortunately we cannot disclose names yet. We have also signed a deal with one of the biggest reinsurance companies for provision of insurance coverage for digital assets. Our goal is to solidify our base in Switzerland and Germany and expand globally.

Are there any types of restrictions on the type of digital assets that Custodigit offers custody services for? 

Currently we support following digital assets: BTC, ETH, XRP, BCH, LTC, ERC20. We usually select digital assets based on our customer’s request. We do not have specific restrictions; however prior offering a digital asset on our platform, we do our due diligence. If we believe that the digital asset could in any form or shape harm our reputation within the market, we refuse to offer it. Based on our market observations those are relevant digital assets for financial institutions. Currently, Custodigit is expanding is platform in the direction of tokenized assets as well.

Is there anything else that you would like to share about Custodigit?

We are Swiss based company and we strongly adhere to Swiss banking industry practices. We strongly believe in importance of reputation and protection of clients’ funds. Since Swisscom is our major shareholder, we have to take security framework very seriously and ensure that our clients’ funds are stored safely. Safety and regulation are in Custodigit’s DNA.

Thank you for the great interview, readers who wish to learn more should visit Custodigit.

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