Inside Sygnum: The World’s First Digital Asset Bank

Over a decade since the first cryptocurrency – Bitcoin – was minted, the digital asset ecosystem has flourished significantly, with a vast universe of tokens and innovative blockchain applications drawing the interest of users and investors alike. With the industry has become increasingly complex, this is where Sygnum Bank, the world’s first digital asset bank and fully-regulated digital asset specialist, thrives. Sygnum empowers institutional and private qualified investors, corporates, banks, and other financial institutions to invest in the digital asset economy with complete trust. Early this year, Sygnum raised USD 90 million in a funding round, raising the company’s valuation to USD 800 million as venture capital firms pour record-shattering amounts of money into the crypto industry.

What does a bank for digital assets look like?

Sygnum was founded in the financial hubs of Switzerland and Singapore in 2017, under the leadership of Luka Müller-Studer, Manuel Krieger, Mathias Imbach and Gerald Goh. Originally, it was an ambitious idea they’d discussed over dinner in Singapore. Fast forward, Sygnum now maintains an active presence in both Europe and Asia. In Switzerland, Sygnumholds a universal banking license issued by the Swiss Financial Market Supervisory Authority (FINMA). This is the same banking license issued to highly acclaimed financial institutions such as Credit Suisse and UBS. The entire process of obtaining it took exactly 303 days. 

Meanwhile, in Singapore, Sygnum operates as a digital asset fund manager, securities dealer and custodian, and corporate finance advisor, with a capital markets services (CMS) license issued by the Monetary Authority of Singapore (MAS). “Overall, Sygnum offers a fully regulated one-stop platform for an entire suite of digital asset financial services and offerings,” says Vice President, Strategy at Sygnum Singapore, Jonathan Tan. 

Many of the services Sygnum offers have their roots in the traditional financial services industry. However, where the company stands out is its ability to flexibly offer access to the market for digital assets with its services through a robust regulated platform. 

Accounts, custody, and B2B banking services

Accounts and custody services form the core of Sygnum’s other services offered by the bank in Switzerland. Under this, clients can deposit traditional currencies like CHF, EUR, SGD, and USD, similar to any other bank. What sets them apart is that clients can also use their accounts to buy, trade, and hold an expanding range of digital assets. Today, the full list of tokens supported by Sygnum are: Bitcoin, Ethereum, Ripple, Bitcoin Cash, Litecoin, Tezos, 1inch, AAVE, Aragon, Bancor, Compound, Curve.fi, Internet Computer, Chainlink, Polygon, Maker, Cardano, Synthetix, and Uniswap. 

“In a traditional bank, you can deposit fiat and convert one currency into another via the bank’s foreign exchange services. Likewise, for Sygnum, you can open an account and deposit digital assets like cryptocurrency. Later, you can convert this into fiat or trade it with a different cryptocurrency, all within one platform. This level of flexibility is an advantage Sygnum has over many digital asset players in the market.” explains Jonathan.

Sygnum also offers B2B banking services, which enables other banks to offer digital assets to their clients through a regulated banking platform. Already, 10 leading organizations are tapping into Sygnum’s infrastructure, including Bordier & Cie and VZ VermögensZentrum. 

Brokerage services 

Sygnum’s brokerage operations in Switzerland also help its clients buy, trade, and sell crypto tokens in a highly secure and seamless manner. Clients are connected via the brokerage desk to a diverse pool of liquidity partners, providing them best prices and fast execution of their trades. This enables clients to focus their attention mainly on making investment decisions and not having to worry about platform and settlement issues.

Credit and Lending

Clients of the bank in Switzerland can use their digital assets as collateral to take out a fiat loan. This way, clients can use the loans to invest in more digital assets or simply for any other purpose. The bank allows over 20 digital assets to be used as collateral. The loan application process is fast, with funds released as soon as within 2 to 3 working days after applying. Interest is charged depending on the amount of money withdrawn, the use of proceeds, and the client’s risk profile. Notably, the recent steep downturn in the crypto market resulted in several lending platforms collapsing. However, Sygnum has a robust risk management framework and proactively monitors the positions of its clients. As such, despite the market correction during the past few months, the company hasn’t had to liquidate any client positions, and its financials remain stable. 

Asset management

As cryptocurrency and other digital assets become more widespread and institutionalized, many want to build exposure to the asset class. However, investors may lack the know-how to directly hold and incorporate digital assets as part of an investment portfolio. As such, some investors may prefer to build exposure through portfolio managers and investment products. Sygnum in Switzerland and Singapore brings to the market a suite of asset management products tailored to different investment objectives ranging from directional exposure to crypto markets to more market neutral Decentralized Finance (DeFi) yield-generating strategies. Clients may also tap upon the expertise of portfolio managers who can help them develop strategies tailored to their investment objectives and risk profiles.

Tokenization

Sygnum’s tokenization solution empowers issuers to leverage blockchain technology and raise capital more effectively. The solution encompasses the entire value chain from advising on deal structuring to developing tokenomic models, token minting and issuance, settlement, custody, and secondary trading. It also enables investors to access unique investment opportunities by tokenizing existing asset classes to make them more accessible. 

With Switzerland’s adoption of a ‘Distributed Ledger Technology Bill’ in 2021 that recognizes security tokens with the same legal standing as actual security or share, this takes on a whole new meaning. “One of Sygnum’s tokenization milestones is taking a Picasso painting and fractionalizing it into 6000 art security tokens. It was an opportunity to democratize investing in fine art, an asset class that is inaccessible to most individuals. Sygnum has also tokenized other assets, including a case of investable fine wine, a loan portfolio, and even a CryptoPunk non-fungible token,” adds Jonathan.

A pioneering leader paving the way forward

As the world’s first digital asset bank, Sygnum is a pioneering industry leader. But one of its earliest challenges was that the regulatory treatment of digital assets back when Sygnum was first founded was not well established. Hence, it had to pioneer several frameworks – such as developing a cryptocurrency anti-money laundering engine – in close consultation with the regulators to ensure that it would be on par with prevailing standards in the financial services industry. As a result, from obtaining the required licenses in Switzerland and Singapore to creating innovative products that meet the needs of its clients, Sygnum has overcome several hurdles. This feat was made possible with Sygnum’s diverse team covering several functions, including banking, investment management, legal and compliance, and technology.  

Looking toward the future, Jonathan shares that the company has submitted its application for the Major Payment Institution license in Singapore to expand its offerings for accredited and institutional investors in the financial hub and has set its sights on new markets in the Middle East and elsewhere in Europe. Moving forward, Sygnum remains committed to empowering the next generation of professional investors around the world to build their digital asset portfolios with complete trust.