Sygnum Bank, a leading digital asset banking group based in Switzerland, has announced its plans to tokenize $50 million of Matter Labs’ reserves. This strategic move marks the first instance of Sygnum tokenizing traditional assets and signifies a pivotal step towards enhancing transparency and security in the realm of institutional custodianship.
The $50 million investment will be directed into the Fidelity Institutional Liquidity Fund on behalf of Sygnum’s client, Matter Labs. Subsequently, these funds will be tokenized on the Ethereum-based zkSync layer-2 blockchain, a platform curated by Matter Labs. This initiative forms part of Matter Labs’ overarching strategy to migrate its entire treasury reserves onto blockchain platforms under institutional custody.
Source: @sygnumofficial on X
The Fidelity Institutional Liquidity Fund, an open-ended fund domiciled in Ireland, serves as a robust financial vehicle with a total asset base of $6.3 billion. By tokenizing a portion of its holdings within this fund, Matter Labs aims to establish transparency and accountability through proof of reserves. Marco Cora, Senior Vice President of Business and Operations at Matter Labs, emphasized the significance of this move, stating, “Moving USD 50m of our treasury reserves onto the zkSync blockchain showcases its institutional-grade security as well as our commitment to transparency.”
Sygnum’s decision to tokenize traditional securities represents a significant milestone for the banking group. Mathias Imbach, Co-founder and Group CEO of Sygnum, underscored the importance of compliance and regulation in conjunction with blockchain innovation. Speaking at the Digital Asset Summit 2024 in London, Imbach highlighted the bank’s belief in the synergy between permissionless public blockchains and regulatory frameworks, aiming to foster collaboration within the ecosystem.
The zkSync blockchain, founded in 2018 to address scalability issues for Ethereum decentralized applications (DApps), has rapidly gained traction within the blockchain community. Following its public mainnet launch in April 2023 and substantial Series C funding of $200 million, zkSync has demonstrated remarkable growth, boasting a total value locked (TVL) of $715 million as of March 19.
Sygnum’s foray into asset tokenization dates back to 2020 when it became the first bank to tokenize its own assets. Since then, the bank has expanded its offerings, providing clients with access to cryptocurrency staking and brokerage services. Notably, Sygnum’s Singapore subsidiary obtained a Major Payment Institution license in October 2023, enabling the provision of crypto brokerage services to accredited investors and institutions, albeit excluding United States clients.
The tokenization of Matter Labs’ reserves by Sygnum heralds a new era of collaboration between traditional financial institutions and blockchain innovators. As the intersection of finance and technology continues to evolve, such initiatives pave the way for enhanced transparency, efficiency, and accessibility in the global financial landscape.