Sygnum, a digital asset banking group, announces the expansion of Sygnum Protect, its off-exchange custody platform, to include Deribit, the world’s largest crypto derivatives exchange.
This latest integration enables traders to hold their assets in a regulated banking institution with “institutional-grade” security, while “accessing the world’s largest crypto derivatives exchange’s deep liquidity.”
Sygnum was reportedly the first bank to launch off-exchange custody services for institutional traders with Sygnum Protect in early 2024.
Sygnum Protect’s integration with Deribit now leverages Fireblocks’ innovative Off Exchange solution, “enabling traders to mirror assets held in Sygnum’s custody to Deribit while accessing its broad instrument universe.”
Sygnum Protect avoids the need to pre-fund trading venues “by fully segregating trading and custody and also safeguards against defaults by exchanges.”
Sygnum’s “bank-grade” security and ability to “hold client assets off-balance sheet mitigates counterparty risk and enables traders to fully focus on their investment decisions.”
Dominic Lohberger, Sygnum Chief Product Officer said:
“Counterparty risk awareness in crypto comes in cycles, and the recent major cyber-attack has triggered one of the largest waves of exchange derisking since FTX. It is yet another reminder that separating crypto custody from exchange trading is essential for security. Sygnum Protect is also an essential building block for strengthening the resilience of the crypto industry.”
The need for counterparty risk mitigation and additional layers of security has become increasingly “crucial in the institutional crypto trading space where trading venues also act as custodians.”
To counter the threat from increasingly sophisticated cyber-attacks, close industry collaborations such as those “between Sygnum, Deribit and Fireblocks that centre on robust security are fast becoming mission critical.”
Luuk Strijers, CEO of Deribit said:
“We are very pleased to offer additional security and transparency capabilities to our institutional clients looking to trade crypto derivatives through Sygnum Protect. This integration provides institutional traders with both the capabilities and security assurances they require to trade any of Deribit’s leading products comfortably.”
Fireblocks Off Exchange enables trading firms to maintain “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 securely segregated in “shared MPC wallets, and on-chain settlement is utilized to ensure that funds are safe from hacks, bankruptcy or fraud.”
Michael Shaulov, CEO of Fireblocks said:
“This integration with Sygnum Protect and Deribit demonstrates the power of Fireblocks Off Exchange. Exchanges and custodians can now leverage our standardised integration without requiring custom development — accelerating institutional adoption so assets can be securely held via regulated bank custody.”
Since Sygnum became the “first” bank to launch its Sygnum Protect off-exchange custody services for institutional traders, it has “attracted strong demand.”
Sygnum Protect enables flexible collateral options, “including fiat, crypto, and traditional securities, with assets held off-balance sheet in bankruptcy-remote custody with Sygnum Bank.”
As noted in the update, digital asset collateral types “include BTC, ETH, stETH, SOL, USDC, USDT, MATIC, XRP, PAXG.”
Forward roadmap also includes a “range of Tokenized Money Market Funds (TMMFs).”