The following interview is a conversation between Zeel Shah, RealPort’s Head of Product and Alexis Hamel, Managing Director of Solaris Digital Assets. Solaris Digital Assets are RealPort’s Digital Custody Partner. This interview is a part of our “In Conversation with RealPort’s Ecosystem” series.
Zeel Shah: To begin, we want our readers to get to know you a little better. Can you please tell us about your background and your journey to becoming the expert in your field?
Alexis Hamel: I have always been fascinated with the inner workings of the economy — how global markets function, how resources and capital are allocated and how value is created and exchanged. As Managing Director of Solaris Digital Assets, I am currently in charge of the Digital Assets product strategy of Solarisbank. Before I began working within the crypto space in 2018, I was working in FinTech & investment banking, which gave me a broad background and exposure to both retail but also institutional needs.
In a nutshell, what is it exactly that Solaris Digital Assets (SDA) are doing?
With Solaris Digital Assets as your partner, you get everything you need to build your own digital asset product under one roof. By plugging our APIs into your frontend, you can enable your customers to buy, sell, send and hold digital assets seamlessly and securely. As a 100% subsidiary of Solarisbank, our services can be complemented by white-label banking services such as accounts, cards and lending products.
What are SDA’s biggest differentiators compared to other digital custody solutions?
With our unique API-based approach, our partner stays in full control of the branding and user experience of their product, while we take care of the heavy lifting in the background. This direct integration with our partner’s frontend makes the experience as seamless as possible for the end user. Further, by abstracting away the technological and regulatory complexity of offering compliant digital assets services we enable our partners to launch their product much faster than if they were to build it themselves.
How are SDA and RealPort creating value to the market space? At what stage did you enter the project and where do you see the future development potential?
RealPort’s vision of making alternative assets globally tradable through blockchain technology meshes perfectly with Solaris Digital Assets’ vision of driving digital asset adoption. While others are merely talking about the potential of the blockchain, the team behind RealPort is actually putting it into practice — and to full effect. Through the tokenisation of alternative assets, RealPort is giving institutional investors access to assets that were formerly entirely illiquid, creating new markets that can harbour a lot more participants and that allocate capital far more efficiently.
Can you explain the impact of institutional investors entering this space on digital asset custody?
In 2020, we saw new levels of trust in digital assets as the sentiment of previously sceptical Wall Street pundits took a 180-degree turn on crypto currencies and institutional investors started to crowd into the crypto market. These are glaring signs that digital assets and crypto currencies are no longer a niche phenomenon, but a highly sought-after asset class that is cementing its place in institutional portfolios around the globe.
Having said that, from an institutional perspective, the appeal of any given digital asset is not only how promising its return is, but crucially also whether it can be stored safely. This development is why digital asset custody plays such a pivotal role in enabling digital asset adoption. With our technology, we lower the hurdles for investors to participate in this immense opportunity safely and conveniently.
How do you expect digital asset custody will evolve over the next 10 years?
Digital assets are establishing themselves as an asset class of their own, and are on their way to replacing traditional assets altogether. While we may not yet be able to fully trade shares on the blockchain, the rise of Bitcoin, for example, gives us a taste of what is to come.
Like gold, Bitcoin is not used as currency, but as a reserve asset that hedges against inflation and economic uncertainty, particularly in times of crisis. However, Bitcoin has multiple advantages over gold. Divisible by eight decimal places, Bitcoin is far more liquid and can be transacted infinitely faster than gold — at a fraction of the cost. So, the same advantages can also be reaped from the tokenisation of other traditional assets like equity, debt and real estate. Innovative blockchain solutions like the RealPort platform, are leading by example here: through the tokenisation of real assets, they allow smaller institutional investors to get access to flexible and smaller tickets and enable asset owners to realise liquidity.
It is not a question of if, but when this mechanism will translate into all other asset classes too. All you need is the right regulatory framework and technology provider to tokenise and safely store these assets.
How will digital custody and traditional custody co-exist? Or do you think digital custody will disrupt traditional custodians?
The shift from paper-based assets to digital assets across all different asset classes will consequently also be followed by an increased demand for digital asset custody, both on the institutional and on the retail side. It is too early to tell whether traditional custodians will miss the trend or whether they will help push forward digital asset adoption. However, only few incumbent security custodians and banks have sought out for the new crypto custody license in Germany.
Either way, the German regulator is making significant steps in creating a hotbed for blockchain innovation in Europe with its crypto-friendly regulation. The first step was the introduction of the aforementioned crypto custody license, under which Solaris Digital Assets is operating. Now, as we speak, a new bill on electronic securities is being discussed in the German parliament that aims to introduce an own security class for digital securities in Germany. This would be an interesting step towards legal clarity in the market and open the floodgates for institutional investment into digital assets.
What has been particularly special about the collaboration with RealPort and our product proposition?
The partnership between RealPort and Solaris Digital Assets is exemplary for our aim to empower innovative players that are driving digital asset adoption. RealPort’s ambition to create a digital issuance platform and marketplace for real assets was a first in the German market, so we are very glad we got to enable a product that represents a complete novelty.
How do you see value created in your relationship with RealPort?
The unique thing about the partnership is that Solarisbank and Solaris Digital Assets are supporting RealPort along each step of the value chain. From a seamless business KYC for the compliant identification of the investors and asset owners to digital euro accounts for the invested fiat funds and finally the secure storage of the tokenised assets, RealPort is using the entire spectrum of services on our platform. This way, RealPort can focus on delivering value to their platform participants and leave the regulatory burdens of the banking and custody operations up to us.
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