Bond representing CHF on blockchain was issued06 November 2018
New bond that will be pegged to Swiss Franc and represent the currency on blockchain was issued on Thursday, Nov. 1st. The instrument crated by Swiss Crypto Tokens aims to attract mass investors to cryptocurrencies.
Swiss Crypto Tokens created, sold and issued a new bond that will represent CHF in cryptocurrencies world. First 10 million units of bond, worth one Swiss Franc each, have been already sold out and were issued on Nov. 1st. The digital token is named XCHF and is strictly linked to CHF. The aim of the new bond is to narrow down the possibility of volatility of prices of crypto assets. Currently, exchange rates of cryptocurrencies are plummeting and hiking in range of just days – the fluctuation of prices is huge. This is something that refrains mass adoption of cryptocurrencies and their use as an exchange medium or a storage of value. Swiss Crypto Tokens decided to find solution to this by issuing an asset based on blockchain but linked to FIAT currency. Thanks to this, the volatility of prices of XCHF will be limited by CHF exchange rate fluctuation. Digital tokens can be purchased by smart contracts. A clause in smart contract allows negative rate interest. That means that if the bank that holds Swiss Francs used for purchase of XCHF will charge negative interest rates, digital tokens will be covered for that. The Holder of CHF used of purchase of digital tokens is Helvetische Bank. Bonds purchased for Swiss Francs can be later redeemed also for CHF or a bitcoin or both of them. Investors can use bonds for investing in blockchain start-ups or to stable bitcoin.
XCHF tokens is yet another stable coin – an instrument aimed at mitigating the cryptocurrencies’ volatility of prices. Blockchain start-ups have been raising money via Initial Coin Offerings, where cryptocurrencies are issued. However, the rapid changes of prices means the capital of such companies can quickly evaporate. Because of the violation of exchange rates, investors are afraid to buy cryptocurrencies at massive scale. This is seriously blocking the growth of liquidity in the blockchain market. What is more, adoption of cryptocurrencies for massive scale as a competitor for FIAT currencies in terms of being a medium of buying goods and storing value, is highly limited due to fluctuations of prices. Stable coins aimed to change all of these. By mitigating volatility of prices, stable coins will be able to encourage investors to buy cryptocurrencies, will improve liquidity of companies driven by blockchain and aid mass adoption of digital money.
Other stable coins projects
XCHF is not the first project of stable coins launched recently in Switzerland and worldwide. Last week Smart Valor announced that it will issue CHFt coin linked to CHF. This year Scenic Swisscoat launched a coin pegged to CHF that can be only bought via servers of the company. Alprockz created ROCK, a Swiss Franc-linked digital coin. Swiss Longevity Holding has plans to issue SWIS, a stable coin. Other idea for stable coins, than pegging digital tokens to FIAT currencies, is linking them to commodities or creating an algorithm that will ensure the value of the coin is stable. The example of a stable coin linked to commodities is Venezuelan Petro linked to mineral reserves of the South American country or a Swiss Tiberius Coin connected to a few metals. Whereas, Swiss project Fortis is working on ARES, a token with the algorithm that will keep the stable value of the digital assets. Whenever the value inflates or deflates, the algorithm will supply currency to stabilize the exchange rate.
There is currently a lot going on in the area of crypto currencies in Switzerland. However, the lack of stability prevents further popularization and makes investing in them a risky undertaking. The Swiss fintech industry is much more than just crypto currencies. Many companies, such as ExchangeMarket.ch have established themselves on the market and offer solutions that save their customers money and time while at the same time not posing a risk.
At ExchangeMarket.ch we strive to provide our clients with easy, fast and cheap money exchange. Our online exchange office is designed to make processes as easy as possible while giving the customer full control over the process. Above all, we want to offer our customers the best EUR CHF exchange rate. For those who want to sell swiss francs and buy euros, we offer the optimal solution. You can compare our EUR CHF exchange rates using our currency converter. This way you can quickly find the best exchange rates in Switzerland. Feel free to contact us if you have any questions.