This article is from Crypto Finance’s magazine Building Blocks. Philippe A. Naegeli, CEO of Crypto Finance’s partner GENTWO, talks about the securitization of assets, the demand for alternative assets, and the partnership with Crypto Broker AG.
GENTWO is working with Crypto Broker to enable digital assets within financial products. This announcement was made mid-November 2018. How has the business developed since the announcement?
The business has been great. We are very proud to work with Crypto Broker. Together, we made history by creating the first issuing platform for financial products in the crypto space ever, worldwide. That alone shows how competent our collaboration is and we will continue to push boundaries to ensure our clients will have solid investment products to realise future growth.
What are the benefits of GENTWO’s securitisation of digital assets?
The solution connects the traditional and digital capital markets by simply translating digital assets into regular bankable securities. It helps institutional investors and their clients across both markets. To support the digital asset market and its wonderful growth and development, our clients from traditional approved banking networks can invest in all crypto assets and tokens. Not only the setup is innovative, but the investment process is also highly functional.
What makes this process fast, affordable, and transparent?
The solution is purely purpose-oriented. To benefit our clients and the sector, we freed our offering and processes from commissions, unnecessary overheads, and costs as well as other structural inefficiencies. Our clients are offered a simple, transparent structure that puts them in control of creating tailor-made financial products.
How would you describe such a tailor-made financial product? Please give us an example.
A good example is an Actively Managed Certificate (AMC). A similar concept exists in traditional investment funds. Asset managers can implement their portfolio strategies and innovative ideas in a product segment with particular flexibility and effectiveness. Thanks to our off-balance-sheet issuance set-up, a discretionary portfolio strategy can be made easily and in a more timely manner. At GENTWO Digital, we can implement an investment strategy with the Swiss-compliant security of Swiss ISIN codes in five to fifteen days.
Do you have a recent example you can tell us about and how is it changing the investing landscape?
Through GENTWO Digital’s solution, a traditional asset management house in Zurich was able to offer its clients exponential performance during the positive price development in cryptocurrencies in recent months. A second example is investment certificates that crypto miners have created.
These are two examples of how our tailor-made financial products are changing the investing landscape: traditional investors benefit from new income sources that are not correlated with other asset classes and, in some cases, receive regular, consistent returns, such as with crypto mining investment certificates.
You state that your solution allows Swiss ISIN codes to be created. How did you achieve this and what benefits does this bring for investors?
The demand for alternative asset classes – which include digital assets – is growing, because they represent a promising source of financial income. Our solution addresses this growing demand by making all alternative assets easily accessible for all sorts of investors, including institutional clients. A Swiss ISIN gives institutional investors a level of confidence that is beneficial for their clients.
Who are the main investors in these new financial instruments?
Qualified investors such as institutional investors, and regular clients’ financial intermediaries, asset managers, family offices, and banks.
GENTWO launched the issuing platform with Crypto Broker. Why is Crypto Broker such an important business partner for the brokerage services in this project?
Crypto Broker is a reliable business partner and relevant in the crypto space. We know that our clients have good experiences with Crypto Broker. Its brokerage services fulfil the expectations that investors have when working with a renowned broker in traditional markets. Even though most people and institutions understand today that only purpose-driven businesses are fit for the future, it is still not obvious to find purpose and client-oriented partners in our emerging industry. Ultimately, we all want to deliver the best possible service and performance for our clients, right?
How is the offering from GENTWO clients being taken up in the emerging crypto asset market?
The crypto community embraced our offering. Through GENTWO Digital, the traditional and the digital asset markets have been successfully linked. Several of our clients are developing their businesses with this innovation and tapping new growth opportunities.
Is this part of a larger shift in investment strategies that could signal further maturity in the crypto asset market?
Our solution is of great benefit to digital assets, and it supports further market development by connecting traditional investors to the digital markets. My honest opinion is that the time has come to accept these changes, and that digital and traditional asset markets will unite. The question is what role one wants to play.
How many investors from the traditional financial community are investing in digital assets? How is this set to evolve as your clients grow?
Recent numbers show that interest in digital assets is growing exponentially and the investor base is diversifying. What needs to evolve is the fact that most institutional money does not have easy access to these growing digital markets.
Will this evolution of securitising digital assets disrupt any traditional sectors, and how do you think it will develop?
Re-thinking the proven, traditional securitisation process creates new opportunities. We are not here to disrupt traditional markets. We look to add value and enable growth by building a bridge between the traditional financial world and the emerging crypto markets, with the intention that they will soon merge into one mainland.