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Each day in Basel, Switzerland, global bank regulators toil away at developing new regulations to determine which banks and their practices are most likely to cause instability and a potential liquidity crisis in global financial markets. One hundred kilometers south in Switzerland’s Crypto Valley a new cryptocurrency X8Currency is accomplishing what the teams of central bankers, finance ministers and international financial regulators have failed to do. The Zug, Switzerland company’s portfolio risk management solution aims to protect investors from cryptocurrency illiquidity and volatility. At the center of its solution is X8Currency, a cryptocurrency backed by a reserve basket of eight fiat currencies and gold.
The irony is not lost on the fact that the global banking regulators are only starting to turn a scrutinizing eye on Crypto Valley and the risks in the global cryptocurrency markets. But fintech innovation is showing that it can succeed where regulators have yet to tread. Applying Blockchain technology and automated portfolio risk management, X8Currency could become the gold standard in cryptocurrency risk management.
Which way to the market exit?
The scrutiny of cryptocurrencies by financial regulators is not unfounded. Cryptocurrencies show many classic signs of an asset bubble. Bubbles need an object of speculative excess. In the 17th century Dutch golden age it was tulip bulbs. In 2008, it was subprime mortgages. Today, central banks are warning of an overheated cryptocurrency market.
The greatest fear in any financial system is the inability to exit by selling declining securities in a falling market. For bank regulators, the domino effect is the big scary monster in the risk management closet. Each year, the regulators in Basel create a list of the top 30 banks according to their exposure to global financial markets. If one of these banks fails, other banks could topple too. This rush-to-exit risk is highest in illiquid markets such as the developing cryptocurrency market where it could be harder to find a counterparty for a depreciating currency.
A safe haven cryptocurrency
Based on 10 years of platform development, X8Currency is designed to provide investors with a safe haven and exit strategy in the growing crypto economy. To the presumed delight of financial regulators, the risk management platform has been engineered to Swiss financial standards. X8 Capital is a Swiss financial institution subject to the regulations of the Swiss financial regime, considered to be among the safest in the world. X8Currency has several layers of security. The cryptocurrency is backed by a reserve basket of eight major fiat currencies. Physical gold reserves provide a second risk net. The currency is reinsured through SwissRE.
Convertibility risk is mitigated. Exit strategies often exist in a declining market, but the cost of executing them is too high. X8Currency charges no fees to convert between X8 and crypto and fiat currencies. If the markets are falling, the stable X8Currency can be exchanged on demand for any of the eight fiat currencies. The proven performance of the X8C automated currency management system ensures stability. ARM AI sources the best exchange rates across the basket of currencies while minimizing risk and preserving value. The system was tested during the currency volatility caused by the Brexit crisis. X8 depreciated less than two percent before rebounding while the British pound declined 20 percent. The ARM Al currency manager has maintained its annual inflation target of one to three percent since testing began.
A bridge between crypto and fiat currency trading
Owing to these risk management mitigation controls, holding X8C tokens provides a hedge against negative market events. Crucially, they constitute an institutional-level cryptocurrency portfolio risk management solution. The ironclad security and safety will allow pension funds, ETFs, mutual funds, banks and other large investors to safely enter the cryptocurrency market while still complying with the tightening regulatory standards placed on financial institutions. X8C expects the entry of institutional players to propel the cryptocurrency markets from billions to trillions in market capitalization.
To obtain X8Currency, investors need to obtain X8X tokens, the key to X8 Capital AG and the trading of X8Currency. Trading in X8Currency is conducted on the transparent Blockchain, enabling independent auditing. X8X tokens can be purchased from Jan. 4th during the pre-sale. The crowdsale runs Jan. 12-22. In accordance with Swiss regulations, investors first complete the know your customer (KYC) registration process, which is accessed directly through the X8C website after signing up for the whitelist.
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