Sygnum Bank AG, a digital asset bank regulated in Switzerland and Singapore, has expanded its off-exchange custody platform, Sygnum Protect.
Sygnum states that it was the first bank to launch off-exchange custody services for institutional traders with Sygnum Protect in early 2024. The service aims to avoid the need to pre-fund trading venues by segregating trading and custody while safeguarding from defaults by exchanges.
Sygnum Protect has now integrated with Deribit, which leverages Fireblocks’ off-exchange solution, enabling traders to mirror assets held in Sygnum’s custody. Derabit is a professional-grade cryptocurrency derivatives platform. Sygnum Protect enables collateral options, including fiat, crypto, and traditional securities, with assets held off-balance sheet in bankruptcy-remote custody with Sygnum Bank.
Dominic Lohberger, Sygnum Chief Product Officer, says counterparty risk is always a concern and recent hacks have highlighted the challenge. He states these attacks are a “reminder that separating crypto custody from exchange trading is essential for security.”
Fireblocks Off Exchange seeks to allow trading firms to keep control over their assets while traders execute instant spot, margin and derivatives trades.
Firms programmatically lock assets in wallets they control, mirroring collateral to the exchange without ever giving up custody of their own digital assets.
The assets remain segregated, and on-chain settlement is utilized to ensure that funds are safe from hacks, bankruptcy, or fraud.
Michael Shaulov, CEO of Fireblocks, says accelerating institional adoption requires custody to be held in a regulated bank.
Sygnum says the introduction of these services has attracted strong demand.
