Regulated Crypto Exchanges & SCX | Cédric Waldburger


Hey guys.
I’m at Berlin Airport and while I’m waiting
for my flight I finally have an opportunity
to talk about some of the amazing projects
that I’ve seen within the last few weeks.
Music.
Last week I did a call with SCX (Swiss Crypto
Exchange).
We did that call as a part of Nextblock.
Nextblock is a crypto community that I started
about one and a half or almost two years ago
now.
And SCX is interesting because they are setting
up a fully regulated crypto exchange in Switzerland.
Both their founders – Cyrill and Kevin are
members of Nextblock (nextblock.io).
So, we decided to host a call and talk about
what they’ve learned in their journey so far.
Why is this important?
Why does this fit into Inside DFINITY?
Well, exchanges are an important part of the
current ecosystem.
If you cannot exchange token for either fiat
or another token that might be more liquid,
or what might be one that you can use as a
utility or security token somewhere in your
life, then it’s very hard to give any utility
to that token or to use that token.
So, exchanges typically fulfill that promise:
they allow you to exchange one token against
other means of payment or value.
And, second, I think, there are a lot of scandals
out there that are in relation to exchanges.
The Swiss Crypto Exchange tries to go a very
regulated way, which, I think, is only healthy
for the space; especially when we’ve seen
what happened when exchanges did not pay enough
attention to do things by the book.
People that hurt and lost a lot of their
money.
That’s why I think it’s an interesting project.
Okay.
So, let’s jump in and ask them, “What
is Swiss Crypto Exchange?”
So, basically SCX stands for Swiss Crypto
Exchange.
As we mentioned before, we’re coming from
usually the traditional finance environment
here in Zurich, but also from the tech side.
So, most of the team is pretty young and has
a big tech background, but we also have some
very experienced business guys who’ve been
in, let’s say, in the finance sector in the
heart of Zurich for a long time.
We also launched a decentralized exchange
because we love the idea of a decentralized
marketplace; but just yet, it’s just not
user-friendly enough in our opinion.
So, we wanted to basically work on the decentralized
whilst making everybody available to the centralized
exchange, which will be launched – we’ll
be accepting soon the first users on it.
And basically show that the UX is the most
important part in this aspect.
We want to curate the products very carefully
but also the UX for the users; because most
of the people that we see here and the people
that we want to approach, just don’t know
how to handle a decentralized exchange.
Another thing that we talked about is, “Why
are they based in Switzerland?
Why did they choose Switzerland versus any
other jurisdiction?”
There are tons of very exotic jurisdictions
where people decide to base exchanges off,
for example, Malta or the Caymans, but also
just Liechtenstein and Singapore, or other
destinations.
“So, why did they choose to base the Swiss
Crypto Exchange in Switzerland?
Basically, in Switzerland we have a seal for,
let’s say perfect; let’s say for perfectionism
that we want to have here.
So, everything that we try to do here should
follow according to all the regulations and
make it as easy for the end-user as possible
to trade, to do everything that he did before
but just in a different framework and with
a lot more security for the end-investor.
Another topic that we talked about was, “What
are some key differences between regulated
versus unregulated crypto exchanges?
Probably, one of the most prominent things
will be that listing fees are public and always
the same; so they don’t change.
In crypto exchanges, you usually have variating
fees of how much it costs to list your product
on there.
And this is due to the fact if they want to
see some potential in it or not; and on traditional
regulated exchanges, it’s always the same
price for all the companies they want to be
listed.
It just depends on the services that you would
like to acquire from the exchange.
And then you will be monitored.
So, all of the trades that are being done
on the exchanges are being sent to a regulatory
authority.
So you don’t have any front-running; you don’t
have any insider trading.
Also that crypto exchanges or exchanges don’t
hold money; they never hold any funds; they
don’t hold assets – they’re just very fast
and sophisticated marketplace for products
that they curates very carefully.
And they also had a few remarks on Security
versus Utility Tokens.
Here’s what they have to say about those type
of categories of tokens.“Basically, the
beginning of the year should be possible to
list security tokens.
Right now, as you know, if you list securities
in Switzerland they’re called Buck Effecten,
which is basically another – just it’s a
process of putting a couple of digital or
even physical shares into your book and then
letting it trade be amongst all of the users
of your platform or of your service.
And for the utility tokens, the same thing
applies: whenever you wanted to use it in
an exchange business and use it in a centralized
exchange, you need to create such like representations
of this digital value which, then can be traded
amongst each other.
But we always want to make the possibility.
It’ll be the first actually security exchange
where there is the possibility to have Buck
Effecten, as we call them in Switzerland, and
which are withdrawable from your account.
So, usually when you have shares, you cannot
withdraw them.
There’s rarely a person, which goes to any
of the banks in business and says, “I would
like to withdraw my shares.”
It’s usually chosen from deposit to deposit.
This one will actually be the first one that
will be able to withdraw securities and also
to be classified as securities.
To almost every ICO or crypto project, listing
their token on an exchange is a critical moment.
It’s when the token becomes liquid and thus
a lot of the early investors are able to withdraw
some money and get a payout.
So we asked, “ What do they think is important
when considering listing your token on an
exchange?”
I mean in this environment that you’re currently
in, it’s obviously, it’s a lot of like Wild
West style that you have to go through to
be listed on an exchange.
And it’s hard to give any advice on how to
do it in this environment.
On our side how, how we are going to do is
going to be a streamlined process, which is
always the same; which will be publicly available
to all the ICOs.
If you follow certain guidelines and certain
rules, you will be able to be listed in the
end of the process.
It’s just as simple as that – if you fulfill
the minimum requirements and we do the due
diligence on you, we make sure that it’s not
a scam or anything else.
You will be able to be listed on the exchange
and you will be able to have access to all
the institutional partners that we have in
Switzerland and all of the retail customers
who are going to be using the platform.
So, the very first step is the beforehand
mentioned fundamentalist view.
It’s basically like a Bloomberg page that you have
from your project where you get all the different
information on it, all the necessary information
in order for investors to make educated decisions
on the token.
And once we have that on the platform or we
have fulfilled it out and you have signed
it with your public key that actually gives
out the coin.
This is very important to us that you do sign
the information that you give us, and we sign
it on the blockchain; so it’s never up for
discussion if we did something or if the product
or the project did something, it’s just on
the blockchain.
And this was the information given at that
certain moment.
And once this is there, you will receive a
due diligence questionnaire, which we will
have to go through together.
Once you complete the due diligence questionnaire
and you fulfill all the minimum requirements
of the exchange, there’s automatically a listing
procedure and you will be able to list your
token in the end.
So, there’s not bargaining – you have to
pay more or pay less, or anything.
It’s just normal public pricing that is available
to everybody and the due diligence questionnaire,
which ensures the investor’s security.
And last but not least, “What are the risks
that are associated with listing your token
on an exchange?”
So, if you are listing on an exchange or the
token on one exchange, you obviously have
the one risk that you only have one user group
if the brand of an exchange goes down or if
they **** up somehow differently; then, you’re
associated with only that exchange, and you
will not have any fallback solutions.
Traditionally speaking, though it was usually
that you have especially when you go into
securities, you will have a central entity
that is responsible for making sure that all
of the dividends are being paid out, that
all of the information will go to the end-customers
and investors.
And if you have five or six exchanges which
you do that, you will have to distribute all
of those news and all of those obligations
to all of these parties.
So, there is always a pro and counter side
for this.
From the utility aspect, it totally make sense
to have multiple markets, like you said.
If you want a Asian market, it makes sense
to have it in Asia listed; if you want the
European market, it makes sense to have in
Europe listed.
But as soon as you go into securities, different
laws apply and it’s usually, it’s quite a
lot of effort.
That’s why not all of the small companies
are publicly listed because it’s a lot of
effort to comply with all the regulations
about the information that you need to provide
to your end-investors.
Okay, and that concludes the interview with
Swiss Crypto Exchange.
As I said, they’re not affiliated with DFINITY
in any way.
I just found it interesting to talk to a project
in the space that’s working on a fully regulated
crypto exchange.
And with that, thank you guys so much for
listening.
If you like these videos, please subscribe.
And I’ll see you soon.
[Music]

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