Investors and traders will now be able post selected cryptocurrency assets as collateral alongside traditional assets under the terms of a new digital collateral service (DCS) launched by SIX Group, the Swiss market infrastructure company.
This means that firms managing both bonds and bitcoin can post both as collateral to cover a single exposure or crypto ETP issuers can use crypto assets as part of SIX’s collateral management service.
However, this does not mean that SIX Swiss Exchange as a trading venue is now accepting crypto collateral.
According to SIX, the new service will “simplify operations for simplify operations for traders and their counterparts significantly, enhancing portfolio management efficiency and minimizing counterparty risk”.
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“The role of cryptocurrencies in collateral management will become increasingly important,” said David Newns, head of SIX Digital Exchange.
“Our new and fully integrated solution empowers product issuers, traders, brokers, and market makers to optimize their collateral usage, whether it’s crypto or traditional securities, with built-in risk management safeguards,” said Newns. “This allows financial institutions to embrace crypto collateral on a larger scale.”
The service will initially support Bitcoin, Ethereum, Avalanche, Cardano, Solana, Ripple and the USDC stablecoin. The range of eligible crypto assets will then be expanded based on client demand, according to SIX.
For the Swiss group, the launch of DCS will enable it to claim another ‘first’ in the world of digital assets, following the 2021 debut of SDX, which it claimed was the first secondary market for digital assets as well as the first platform to host a pilot wholesale central bank digital currency for settlement.
