Tokenization use cases in Switzerland​

Context

Tokenization is the process of converting real-world assets or rights into digital tokens that can be stored, transferred and managed on a blockchain. Tokenization has many potential benefits, such as increasing liquidity, reducing costs, enhancing transparency and enabling fractional ownership. In this blog post, we will explore some of the tokenization use cases in Switzerland, a country that has been at the forefront of blockchain innovation.

Macro data

As of 2023, the Gross Domestic Product (GDP) of Switzerland was worth approximately 800 billion CHF. The currency in Switzerland is the Swiss franc (CHF). The GDP per capita, based on purchasing power parity (PPP), for Switzerland was one of the highest in the world, around 90 thousand CHF. The GDP growth forecast for Switzerland is estimated to be around 1.3%, indicating a healthy economy. The trade flows as a percentage of GDP for Switzerland was reported at 138%. The unemployment rate in Switzerland is one of the lowest in the world at approximately 2.0%. economy.com

Digitalization

Switzerland is a highly digitalized country, with most people using the internet, shopping online, and making digital payments. Almost everyone in the country, about 98.4% of the population, uses the internet. This high level of internet usage shows that digital technologies are a part of everyday life for most people in Switzerland. In terms of digital payments, Switzerland is keeping pace with global trends. The total value of digital payments in the country is projected to reach a whopping 55.26 billion U.S. dollars in 2023. This suggests that many people in Switzerland prefer to make or receive payments digitally, rather than using cash.
Datareportal.com
statista.com

Banking data

Switzerland is known for its robust banking sector. To give you an idea, the total assets held by all banks in Switzerland are more than 3.19 trillion U.S. dollars. This is about four times the size of the entire Swiss economy, showing just how significant the banking sector is to the country. Adults in Switzerland usually have a bank account. This is a sign of the country’s high level of financial inclusion, meaning that most people have access to basic financial services. Debit cards are also widely used in Switzerland. In fact, there are around 14 million debit cards in circulation. Considering the country’s population of approximately 8.63 million, this suggests that most adults have at least one debit card. In summary, Switzerland’s banking sector is not only large but also highly accessible to its residents, playing a crucial role in both the national economy and the daily lives of individuals.
statista.com bfs.admin.ch worldometers.info

Context

Tokenization is the process of converting real-world assets or rights into digital tokens that can be stored, transferred and managed on a blockchain. Tokenization has many potential benefits, such as increasing liquidity, reducing costs, enhancing transparency and enabling fractional ownership. In this blog post, we will explore some of the tokenization use cases in Switzerland, a country that has been at the forefront of blockchain innovation.

Macro data

As of 2023, the Gross Domestic Product (GDP) of Switzerland was worth approximately 800 billion CHF. The currency in Switzerland is the Swiss franc (CHF). The GDP per capita, based on purchasing power parity (PPP), for Switzerland was one of the highest in the world, around 90 thousand CHF. The GDP growth forecast for Switzerland is estimated to be around 1.3%, indicating a healthy economy. The trade flows as a percentage of GDP for Switzerland was reported at 138%. The unemployment rate in Switzerland is one of the lowest in the world at approximately 2.0%. economy.com

Digitalization

Switzerland is a highly digitalized country, with most people using the internet, shopping online, and making digital payments. Almost everyone in the country, about 98.4% of the population, uses the internet. This high level of internet usage shows that digital technologies are a part of everyday life for most people in Switzerland. In terms of digital payments, Switzerland is keeping pace with global trends. The total value of digital payments in the country is projected to reach a whopping 55.26 billion U.S. dollars in 2023. This suggests that many people in Switzerland prefer to make or receive payments digitally, rather than using cash.
Datareportal.com
statista.com

Banking data

Switzerland is known for its robust banking sector. To give you an idea, the total assets held by all banks in Switzerland are more than 3.19 trillion U.S. dollars. This is about four times the size of the entire Swiss economy, showing just how significant the banking sector is to the country. Adults in Switzerland usually have a bank account. This is a sign of the country’s high level of financial inclusion, meaning that most people have access to basic financial services. Debit cards are also widely used in Switzerland. In fact, there are around 14 million debit cards in circulation. Considering the country’s population of approximately 8.63 million, this suggests that most adults have at least one debit card. In summary, Switzerland’s banking sector is not only large but also highly accessible to its residents, playing a crucial role in both the national economy and the daily lives of individuals.
statista.com bfs.admin.ch worldometers.info

1. Sygnum Shares

Type: Tokenization of equity

Sygnum is one of the first crypto banks in Switzerland, Singapore and as of recently, in the UAE. The crypto bank and institutional custodian has has skin in the game in the realm of tokenization, having been one of the first in Switzerland to tokenize their own company shares in the year 2020 using “Desygnate”, their in-house tokenization suite.
 

2. Picasso's "Fillette au bereit"

Type: Tokenization of art

The painting “Fillette au béret” by Pablo Picasso from 1964, valued at 4 million CHF, was another example of tokenization done by Sygnum Bank. Art enthusiasts could acquire a fraction of this masterpiece for a minimum investment of 5000 CHF, made possible by the issuance of 4000 NFTs.
 
Targeting qualified private investors and family offices, Sygnum collaborated with Artemundi, a US company specializing in art market investments. The fractional ownership project involved the renowned painting “Fillette au béret,” which was owned by Artemundi’s CEO Javier Lumbreras. The tokenized art was managed by Artemundi, specifying where the artwork was stored and who had access. While the painting may not have hung in a collector’s home, the possibility of exhibition in UNESCO-recognized museums helped enhance its value.
 
By dividing the entire painting into fractions, each having equal value, investors gained the possibility to get exposure on the price appreciation of this unique painting.
 

3. Cryptopunk 6808

Type: Tokenization of collectibles

In December 2021, Sygnum tokenized the CP6808 with the purpose of fractionalizing the NFT to lower capital entry barriers, making it more accessible for investors to hold a part of the original Cryptopunk 6808.
 
What makes this CryptoPunk unique is the rarity score because it is one of only 38% females with several rare features, including dark hair (2%) and a VR Headset (3%).
Whether this is an example of tokenization of art, collectibles or even financial instruments remains a topic for discussion. It is not entirely intuitive to tokenize a token, which is here the case. This use-case represents a fractionalized NFT based on an original NFT, namely a Cryptopunk, a well-known collection made in 2017. In this year, Larva Labs generated 10,000 CryptoPunks using a computer algorithm, gifting each with a unique personality and randomly generated features inspired by the 70’s London Punk scene. The launch of these CryptoPunks kick-started the exponential growth of NFTs and crypto-collectibles. Later in 2022, the Cryptopunks intellectual property was acquired by Yuga Labs, the company behind the Bored Ape Yacht Club and the Otherside metaverse project.
 

4. Fine Wine Capital

Type: Tokenization of collectibles

Sygnum Bank undertook a recent tokenization initiative involving Fine Wine Capital’s premium wines, marking its inaugural asset token offering in the Art & Collectibles investment vertical. The initiative addressed challenges in high-value, illiquid real assets like premium wine, providing wider accessibility, fractional ownership, and enhanced tradability.
 
Fine Wine Capital AG, along with other issuers, participated in the launch of Sygnum’s institutional-grade tokenization solution, which integrated a primary market issuance platform and a secondary market trading venue. The legal framework aligned with the Swiss Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology.
 
Sygnum’s proactive approach was evident in the tokenization of its shares, setting the stage for potential future public offerings. This reflected the bank’s commitment to advancing the tokenization landscape at the intersection of traditional finance and distributed ledger technology, with the aim of broadening access to tokenized real assets for a diverse investor base.

5. Fasanara Capital

Type: Tokenization of debt

In recent years, Software as a Service (SaaS) businesses explored alternative funding methods, bypassing venture capital by borrowing against recurring revenues. Sygnum, the Swiss digital asset bank, assisted European SaaS lender float in tokenizing a portion of its portfolio through Sygnum’s Desygnate tokenization offering.
 
The UK hedge fund Fasanara Capital with $4 billion assets under management acted as the senior lender, while the tokens represented the junior, higher risk, higher return tranche. With an 18-month maturity, a 14% per annum return, and adherence to Switzerland’s DLT laws, the tokenization aimed to bring liquidity to what would typically be a relatively illiquid investment.
 
The token was issued on the Polygon blockchain, allowing for participation in a secondary market. Tokenization’s primary advantage lay in the smaller ticket size, potentially broadening the investor base, although Sygnum did not specifically target average retail investors. The approach sought to enhance liquidity through fractionalization and a secondary market, presenting a pragmatic solution to funding challenges in the SaaS sector.
 

6. David Pflugi sculptures

Type: Tokenization of collectibles

Sygnum Bank collaborated with Victory Works to tokenize a portfolio of football world championship-themed sculptures by renowned Swiss artist David Pflugi. This initiative involved issuing 6,000 Art Security Tokens (ASTs) with an initial total value of CHF 6 million exclusively available to Sygnum clients from April 2022.
The sculptures, created by Pflugi in honor of the 2010, 2014, and 2018 football world championships, carried the personal signatures of finalists and coaches, including football legends like Zinédine Zidane, Ronaldinho, Fernando Torres, Lionel Messi, Luka Modrić, and Kylian Mbappé.
 
Considered genuine and high-value pieces of global sporting history, the artworks were planned to be sold through an auction at the end of the two to three-year investment horizon. Token holders would receive a pro rata share of the proceeds. Victory Works aimed to retain approximately half of the ASTs, with 20 percent of the proceeds designated for charities supporting children in developing countries.
 
The issuance of ASTs, fully recognized under Swiss DLT legislation, occurred through Sygnum’s tokenization platform Desygnate. The first tranche of tokens became available for subscription in April 2022, exclusively to Sygnum’s professional and institutional clients on SygnEx, the bank’s secondary market trading platform.
 

7. Mt Pelerin

Type: Tokenization of equity

Mt Pelerin Group SA is a well-known company in Switzerland for providing fiat-on ramp services. The company was one of the first to tokenize 100% of its share-equity.

The objective was to sell a portion of startup equity to early supporters, offering them direct ownership with true value and solid legal protection. Instead of opting for simpler token forms common in ICOs and STOs, Mt Pelerin aimed to provide a product that mirrored traditional shares in all aspects.

The solution was the creation of a real tokenized share, representing the first share-token. Each token equated to a share, affording token holders identical rights and legal protection as traditional shareholders. This innovative approach distinguished Mt Pelerin from tokens simulating shares through private contracts, providing enhanced protection.

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8. Seba shares

Type: Tokenization of equity

SEBA Bank, a Swiss financial institution with a FINMA license, successfully tokenized its Series B equity using the Blockchain. This move, announced in December when Swiss blockchain laws were enacted, established SEBA Bank’s Equity Tokens as fully compliant with Swiss private and corporate law. The tokens, based on the ERC20 Ethereum standard, provided a secure and regulated digital custody environment within the bank, ensuring compliance with DLT Law.

By issuing security tokens on the Blockchain, SEBA Bank introduced a new standard of security, efficiency, and flexibility in Digital Corporate Finance and Asset Tokenization. The bank, known for its seamless integration of digital and traditional assets, offered enhanced capabilities to its international clients seeking innovative solutions at the intersection of traditional and digital banking. The Equity Tokens were designed to facilitate seamless connectivity for trading and liquidity on future globally recognized digital liquidity venues, further solidifying SEBA Bank’s position at the forefront of blockchain-based financial services.

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9. SEBA Gold

Type: Tokenization of commodities

The Swiss SEBA bank collaborated with Argor-Heraeus and aXedras to create a Gold Token, backed by responsibly sourced gold. This initiative aimed to offer a cost-effective means of accessing precious metals to promote the Swiss gold ecosystem.

Unlike traditional gold derivatives investment vehicles, SEBA Bank emphasized that its Gold Token allowed holders to redeem physical gold at any time without incurring storage and transportation costs.

The SEBA Gold Token functioned as a stablecoin in the digital economy, facilitating transaction settlements, trading, and serving as a store of value. This provided holders with a hedge against volatility in both traditional and crypto markets. Additionally, the token allowed for physical delivery in quantities specified by investors, ensuring empowerment with responsibly sourced gold.

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10.La Pradera Ranch

Type: Tokenization of equity

La Pradera is a well-established 20-year cattle farm in Bolivia, that embodies the “Grass to Cash” concept.

The Finka Token, a unique financial instrument was a tokenization example combining cattle ranching with blockchain technology. It’s a revenue sharing token based on 3000 hectares and more than 3500 head of cattle. The Finka Token was launched and made available for purchase at Area2Invest, a licensed marketplace in Liechtenstein, with Bitcoin Suisse serving as the preferred end customer custodian.

Finka token holders share the yearly Net Operating Revenue (NOR) generated by cattle operations, providing a return ranging from 5% to 8%. Beyond its financial aspects, the Finka Token served as an impact investing tool, promoting financial inclusion, democratization of capital, and aligning with ESG principles. The token encapsulated the value creation of cattle ranching, providing retail investors access to this ancient yet highly productive activity.

The Finka Token, as a financial instrument, converged the solid business fundamentals of cattle ranching with blockchain flexibility. Supported by a cash-positive underlying productive asset, the cattle herd at La Pradera Ranch, the token distributed top-line NOR yearly to all token holders.

Additional benefits included access privileges for token investors to visit La Pradera Ranch, experience cattle ranching firsthand, and engage in various activities. As opportunities arose, existing token holders were granted early access to invest in new cattle operations, translating into discounted investment opportunities.

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11. Alaïa Sportresort in Crans-Montana

Type: Tokenization of equity

Alaïa is a popular action sports destination in Crans-Montana with thousands of monthly visitors, offering unique experiences through sports and hospitality infrastructures, including the Alaïa Chalet, sports center, and Alaïa Lodge. The resort shares were tokenized in 2021 with the infrastructure providers Taurus and Credit Suisse. This tokenization aimed to streamline capital management for Alaïa.

Approved by FINMA, the tokenized shares were set to be traded on the Taurus Digital Exchange (TDX), utilizing an ERC20 extension on the Ethereum Blockchain. The “CMTA20-Token” followed guidelines from the Capital Markets and Technology Association, ensuring a secure linkage between digital tokens and underlying shares.

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12. Hello World

Type: Tokenization of real-estate

Approximately 3m CHF, equivalent to 20 percent of the property value, were tokenized in Baar, Switzerland with the help of Block immo. It was reportedly the first property in Switzerland with a “digital twin” on the Ethereum blockchain. The Baar property, including 18 apartments and the “Hello World” restaurant, was sold to four investors.
Elea Labs supported the transaction by providing property data, aiming to secure and decentralize property information in the digital realm.

To address cryptocurrency price fluctuation risks, a Stablecoin, CryptoFranc (XCHF), was used in the Baar property investment. Bitcoin Suisse’s subsidiary, Swiss Crypto Tokens, supported the transaction, emphasizing the significance of CryptoFranc in the Swiss blockchain economy.

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13. Healthbank

Type: Tokenization of equity

Healthbank, a Swiss health data platform did an STO already in the year 2019.
With the aim of revolutionizing the storage, use, exchange, and sharing of personal health data, putting control back in the hands of users., Healthbank has received 3.2 CHF in funding through a security token offering. Healthbank enabled users full control over data and ownership of the platform and company. The decentralized nature of the STO aligns with healthbank’s cooperative model.

The STO was part of healthbank’s strategy to finance growth. Investors are able to gain dividends, cooperative access, and platform privileges.

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14. BlueOcean

Type: Tokenization of equity

In October 2018, BlueOcean Ventures II made history by becoming the first tokenized medtech VC fund in Switzerland. The launch of SwissVCToken, a dedicated STO platform, enabled token holders to profit from startup investments. BlueOcean Ventures II, based in Geneva, focused on investing in medical device and life science startups, aiming to foster innovations for a healthier world.

Medtech, through virtual diagnostics and innovative treatments, addressed diverse health issues globally. BlueOcean Ventures II concentrated on investments in medical device, diagnostics, and life sciences startups, supporting their growth with financial guidance and strategic vision.
The fund had already invested in five promising startups: Ava, Rheon Medical, Volumina Medical, Luciole Medical, and Abionic. Using the STO platform, BlueOcean sold BOV Tokens, backed by real assets and tied to the value of existing portfolio companies. This allowed qualified investors to gain early profit indirectly from BlueOcean Venture II’s portfolio.

Key benefits included asset backing, liquidity transformation of VC investments into tradable assets, and accessibility with both cryptocurrency and fiat payment options. The presale of 5 million tokens, with a 60% bonus, opened on October 15th, followed by a 30% bonus on 20 million tokens until November 30th. STO net proceeds were entirely invested in BlueOcean Ventures II. Token holders could choose to wait for a pro-rata share of the fund’s proceeds or trade their tokens.

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Are you working on a project that involves tokenizing real-world assets? Our guide focuses on tokenization use cases in Switzerland that deal with real-world assets. If you don’t see your project covered in our guide, please reach out to our editorial team at [email protected] and we’ll be happy to consider including it.