On Partnerships: How Ecosystems Will Push the Development in the Tokenization And Cryptomarket
Cashlink: Dear Boris, we are happy to have you as a guest in our interview series on digital securities and tokenization! Since you have been part of the board of the securities trading bank Bankhaus Scheich for many years, most people already know you. But why don’t you briefly introduce yourself for the few who don’t.
Boris Ziganke: After my law studies at the University of Frankfurt, I started working as a trader at the Frankfurt Stock Exchange. What was meant to be a job alongside my further education at the Frankfurt Court never let me go. As a native of Frankfurt, in addition to my passion for Eintracht Frankfurt, two other hearts beat with me: securities trading and law. For many years now, I have been a member of the management of Bankhaus Scheich and a member of the Exchange Council of the Frankfurt Stock Exchange. I am very lucky that my interests are reflected in my daily work.
Cashlink: With over 35 years of experience, Bankhaus Scheich has expanded their range of services drastically over time – From starting with traditional securities trading back in 1985, to a first acquisition in 2002, to adding additional BaFin licenses in 2015 – which ultimately turned Scheich from a securities broker into an official securities trading bank. Now you diversified your services and added a segment for digital assets under the brand “tradias“. What was the motivation behind this strategic move?
Boris Ziganke: Digital assets are nothing new for us, as we have been dealing with this topic since 2017. Three years ago, however, we were unable to actively implement our solutions because the regulatory framework was simply lacking. Over time, things have changed, and we have seen an opportunity to connect disruptive technologies with the financial world. You now see the benefits of decentralized business systems in both sectors: firstly in currencies in the form of cryptocurrencies, and secondly in asset management in the form of security token offerings. With the number of unique addresses on Ethereum exceeding 120 million this year and an increasing transaction volume on the bitcoin blockchain (surpassed 1 billion this year), we can clearly say that digitization has arrived in our presence and will be more important in the future.
Cashlink: And we definitely agree. As tradias is a fairly new segment of the securities trading bank, could you explain what services are involved?
Boris Ziganke: tradias can be divided into two units: Cryptocurrencies and Security Token Offerings. First and foremost, among the cryptocurrency services is the tradias OTC desk. Here, over-the-counter cryptocurrencies can be traded, for which Bankhaus Scheich provides the prices, in addition, the bank can act as a liquidity provider for crypto marketplaces. Bankhaus Scheich customers have the option to access the bank’s DMA (Direct Market Access). This means that a direct market access to multiple trading venues can be provided through the bank’s trading infrastructure. Lastly, crypto lending completes the service package: we as a bank act both as a counterparty and as an intermediary in crypto lending.
For the second unit of Security Tokens, tradias serves the customers as a platform partner. Through a whitelabel solution, a one-stop-shop for tokenization projects is provided. A notable feature here is the OTC secondary market for security tokens (the so-called open trading): with tradias, digital securities and tokens can now also be sold before a potential maturity date of the investment or purchased after a primary market issuance.
Cashlink: And who should feel addressed by this new product? Who did you make this for?
Boris Ziganke: tradias addresses banks, asset managers, asset owners, distribution platforms and disruptive platform models and thus focuses on B2B2C distribution. However, in addition to the above target partners, we are also happy to support asset managers as well as HNWIs with tokenization and especially fintechs with their disruptive ideas. It is important to understand that we see ourselves as a partner and less as a pure service provider.
Cashlink: 2020 has shown that your words are backed by action: from issuing the first blockchain-based DAX security back in february with Cashlink, to enabling professional investors to trade digital securities in august with Finoa. What can you tell us about upcoming projects?
Boris Ziganke: If we look at this year in the realm of digital assets, we can definitely label it as successful. We are noticing that digital securities and cryptocurrencies are gaining momentum in the banking and financial environment. Real asset tokenization and cryptocurrency trading is particularly exciting here. For this reason, we would like to launch several platforms in cooperation with our partners in 2021 – which ones exactly, I can unfortunately not reveal yet. But be prepared to hear something new from us in the coming spring.
Cashlink: Among the few partners we have covered here in the interview, there are several more. How important do you see ecosystems and what is something that you would like to achieve in this aspect?
Boris Ziganke: For us, this topic is enormously important. However, we think that only through the cooperation of multiple fintechs, who focus on their respective expertise, will effects of scale be generated, with which eventually large market players can be faced. Today, there is still an unproductive mistrust among fintechs, whereas collaboration is the way forward. Each company should focus on their own strengths and compensate for weaknesses through partnerships. The strengths of tradias include licensing, liquidity and financial strength, as well as expertise in market making – Thus, our focus is exactly here. For other building blocks, we use our network: Cashlink and atpar for technology, Finoa for custody, Banking Circle for payment infrastructure – to name a few.
Cashlink: You are one of the driving factors why Europe is slowly gaining a competitive advantage in the field of digital assets. So lastly, we’d like to ask your opinion on whether Germany has the potential to take over a leadership role and what you think is necessary for us to get there.
Boris Ziganke: The progress we have seen in Germany in the area of digital assets was only possible because regulators decided to provide the necessary regulatory framework in time. In order to be a leader in Europe, it is of great importance that this speed is maintained by the regulator. This area is developing so dynamically that even minor regulatory gaps should be accepted and subsequently closed. IN the long term, we need EU harmonization in which the countries with the most experience will have the most scope for design.
Cashlink: Thank you for your time and your interesting insights!