Magda Wierzycka to launch SygniaCoin – a cryptocurrency exchange for SA

Sygnia CEO Magda Wierzycka says the asset management company aims to launch SygniaCoin, a cryptocurrency exchange, in the third quarter of 2018.

On Friday, Sygnia published its financial results for the six months ended March 2018, showing a 41% rise in revenue to R207.3 million, while operating profit climbed 33% to R64.0 million, from R48.2 million in the prior period.

Salient features:

• Assets under management and administration of R180.6 billion as at 31 March 2018 (2017: R158.9 billion), up 14%;
• Profit after tax of R37.0 million (2017: R34.3 million), up 8%;
• Headline earnings per share of 25.34 cents (2017: 26.23 cents) and diluted headline earnings per share of 24.72 cents (2017: 25.40 cents);
• Total expenses, at R137.0 million, up by 21.1%;
• Total dividend per share of 25.00 cents (2017: 25.00 cents).

Addressing the groups strategy for 2018/19, Wierzycka said: “We have spent the past six months actively researching a number of new strategic initiatives that will position Sygnia for the evolving digital future, as well as help its new business development and distribution efforts.”

The outspoken Wierzycka, who has been critical of the systemic political corruption, and ‘state capture’, said that key initiatives planned for 2018 and 2019 include the rollout of “a revolutionary new retail distribution model which should result in significant asset flows into Sygnia’s retail products. This model will be expanded offshore in 2019”.

“We aim to launch SygniaCoin, a cryptocurrency exchange, in the third quarter of 2018,” said  Wierzycka. “The cryptocurrency market is evolving at a rapid pace internationally and domestically, and is attracting both domestic and international flows.

“With its fintech focus, Sygnia is well-positioned to become the first major financial services institution to embrace cryptocurrencies and to offer investors a secure trading and execution platform backed by an international infrastructure, well-designed custody and integration with standard savings products.”

Sygnia said that the regulation around cryptocurrency exchanges is likely to evolve. The 2018/19 Budget defined cryptocurrencies as “digital assets that may be used as a medium of exchange”.

Wierzycka noted that the South African Revenue Service (SARS) has already indicated that trading and investing in cryptocurrencies are subject to tax. “We expect further regulatory frameworks to follow,” she said.

“To ensure the highest levels of integrity and security for clients, we are basing our policies, protocols and processes on existing regulatory framework applicable to cryptocurrency exchanges registered in New York State, USA.

“We will also be able to offer investors the option of holding cryptocurrencies on the Sygnia Alchemy administration portal, alongside their investments through the Sygnia LISP and in SURF,” Wierzycka said.

The group said it will also significantly upgrade its retail infrastructure which will result in a significant reduction in costs, enhance scalability and provide opportunities to expand operations offshore.

“We have also embarked on extensive upgrades to the infrastructure of Sygnia Securities and expanding its range of activities to take advantage of stock lending, market-making and third-party execution opportunities. We believe that this has the potential to significantly enhance our profitability going forward,” said Wierzycka.

The chief executive added that a range of new products has also been designed to cater to the growing needs of our retail and institutional investors., including a ‘Sygnia Cryptocurrency Fund’ that invests in a range of cryptocurrencies on behalf of investors.

“We believe that South African asset managers have become too complacent about the corporate activities of JSE-listed companies. We intend to invest in companies that provide opportunities to unlock significant value by positive engagement with management,” Wierzycka said.

Sygnia said that expenditure was at an increased level primarily as a result of additional expenses from Sygnia Itrix, which included administration and index-tracking fees. Additional expenditure growth came from increased staff and marketing costs.

“Although operational costs were very much in line with the prior period (aside from the added cost base due to the acquisition of Sygnia Itrix) the Group is currently preparing for the implementation of a number of key initiatives, which will require additional expenditure on technology solutions to ensure that Sygnia continues to offer leading fintech solutions in its delivery to clients,” the group said.

Read: SARB says cryptocurrencies are ‘tokens’ and not a currency