This document informs subscribers of the CryptoFranc Bond in accordance with article 1156 of the Swiss code of obligations and documents the terms of the bond.
The CryptoFranc Bond 2019-07 (XCHF 2019-07) is a fixed term bond with automatic renewal / rollover clause issued on the Ethereum blockchain by Swiss Crypto Tokens AG (SCT). One blockchain-based bond token is worth one Swiss Franc (CHF) at maturity, creating a 1:1 relationship between XCHF and CHF (1 XCHF = 1 CHF).
The main purpose of the CryptoFranc is to serve as a liquidity instrument for the Swiss crypto ecosystem. For example, a Bitcoin (BTC) trader could use it to temporarily transfer funds into CryptoFrancs or a Swiss startup could use it to raise funds in its accounting currency instead of using volatile crypto currencies. It is neither intended to be used as a long-term storage of Swiss Francs, nor to be used as a means of payment for everyday transactions.
The Bond has a term of one month. If the bondholder does not explicitly choose to redeem the bond at maturity, it converts into the subsequent CryptoFranc Bond 2019-08 (XCHF 2019-08) free of charge. In the rollover case, no action needs to be taken by the bond holders as the smart contract of the previous bond is reused with adjusted terms. The subsequent bond might again be exchanged under similar conditions, potentially creating a long chain of short-term bonds managed by the same smart contract. The terms of the subsequent bonds are announced early enough (typically about two weeks in advance) to allow the bond holder to reach an informed decision on whether he/she wishes to actively redeem or to passively convert his/her holdings into the subsequent bond. Such announcements are done on the website: www.swisscryptotokens.ch (where the prospectus is published) as well as on the blockchain by emitting an according event.
The interest rate of the CryptoFranc Bond 2019-07 is 0% p.a. Subsequent CryptoFranc Bond series might come with a negative interest rate set at the sole discretion of the issuer, within 1% below the Swiss National Banks (SNB) average rate on sight deposits. Such interests are applied by means of “melting”, which is a contractually agreed and automatically enforced, gradual destruction of a fraction of the bond that corresponds to the interest rate. SCT plans to keep the interest of at least the next three series of the bond at 0% p.a.
Issuance and redemption are subject to a fee, set to 0.2% for XCHF 2019-07.
Like other innovative financial products, the XCHF comes with various known and unknown risks. While it is designed to be much less risky than traditional crypto currencies such as Bitcoin or Ether, it is not risk-free. While SCT holds capital reserves to back the bond with real value and currently has equity worth CHF 1’000’000, it cannot be ruled out that these reserves deteriorate in value, leading to a bankruptcy of SCT and a subsequent loss for the bond holders. SCT will be audited by Grant Thornton Bank Audit Ltd., Zürich.
SCT regularly publishes a report of its reserve holdings and changes therein, allowing bond holders to reassess the risks. For this issuance of the bond, the reserves will be fully held in cash only (physical bank notes in bunkers or book money in bank accounts).
Further information about the bond can be found on the websites of the issuer (www.swisscryptotokens.ch).Prospectus-XCHF-2019-07-v1.0-1