Today, SIX Digital Exchange (SDX) confirmed that it has received regulatory clearance from Swiss watchdog FINMA to issue euro-denominated bonds. This includes their atomic trading and settlement using a tokenized digital euro. To date, the blockchain-based bonds issued by SDX have been in Swiss francs.

The SIX Group also operates the Swiss interbank payment network SIC. Therefore, the SDX-CSD central securities depository is integrated with euroSIC to enable the tokenization of euros (tEUR) and the reverse process where the tokens are converted back to fiat currency. This solution is available to SDX-CSD members. Members include Credit Suisse, UBS, Zürcher Kantonalbank, Berner Kantonalbank and CM-Equity.

EUR-denominated bonds would continue to be subject to Swiss law.

“With this step, SDX once again underlines its status as a pioneer in the digital asset space,” said David Newns, director of SDX. “We are leveraging distributed ledger technology for future service offerings that are now attractive and applicable to the EUR market.”

SDX launched in November 2021 as the first fully regulated CSD and digital exchange. At the time, we noticed that he was looking to tokenize euros for wholesale use, but in Germany through the Frankfurt-based Swiss Euro Clearing Bank (SECB), a subsidiary of SIX. However, he first opted for the euroSIC route. SDX has also participated in central bank digital currency (CBDC) experiments with the central banks of Switzerland and France.

In November 2022, UBS used it for a major bond issue of 375 million Swiss francs ($406 million). The UBS issuance marks a breakthrough not only for SDX but for tokenization in general.

This is because it used an integration between the SDX-CSD and the conventional SIX CSD. So while all issuance is based on DLT, securities can be held conventionally in the main SIX CSD, meaning investors do not require technological adaptation. This makes digital broadcasts viable as adoption of the technology continues to spread.

Earlier this month, the city of Lugano issued a CHF 100 million ($108 million) bond on the exchange.