Sygnum is a digital asset banking group that provides a range of services, including custody, trading, lending, asset management, and asset tokenisation, all  within a secure infrastructure. It also collaborates with financial institutions to integrate digital asset services. Since 2019, Sygnum holds a banking and securities dealer licence from the Swiss Financial Market Supervisory Authority (FINMA), and a Capital Markets Services (CMS) licence from the MAS. It also received in 2023 its Major Payments Institution License (MPIL) in Singapore, allowing the group to offer brokerage services for accredited investors and institutions. The group is also regulated in the global financial hubs of Abu Dhabi and Luxembourg.

At the end of the first half of 2024, Sygnum holds about $4.5 billion in client assets and over $125 million in core equity capital, bolstered by a $40 million capital raise and a $900 million valuation in January. The firm serves 2,000 institutional clients with a global team of 250.

Imbach described 2024 as a pivotal year for the digital asset sector, with progress made on the regulatory front, new frameworks emerging in Europe, the Middle East, and Asia, offering greater clarity to foster institutional trust.

“If we want to leverage the benefits of blockchain technology, we need to also accept where we are coming from. 2024 is marked by efforts to restore trust following a turbulent period in 2022 and 2023, when scandals reshaped the landscape and many participants exited the market,” he explained.

Sygnum’s mission is to create a safe environment for people to invest in this industry. “We see the digital asset sector poised for cautious yet promising expansion, supported by a maturing regulatory framework across major jurisdictions,” Imbach said.

A major milestone was the United States Securities and Exchange Commission (SEC) consideration of Bitcoin Exchange Traded Funds (ETF) in the United States (US), a market previously hesitant to embrace digital assets. Regulatory development in the digital asset space is advancing globally, with major markets establishing more robust frameworks. Switzerland was among the first, introducing digital asset regulations in 2020, with the first laws coming into effect in February 2021. In Europe, the Markets in Crypto-Assets (MiCA) regulation, created by the European Commission (EC), is now partially live, already applying to stablecoins, with full implementation expected by quarter one 2025. Imbach believes that this framework is set to expand institutional participation in digital assets by offering regulatory clarity.

In the Middle East, regions like Abu Dhabi Global Market (ADGM) have established frameworks in as early as 2020. “We believe, in particular, the framework established by the ADGM encourages openness and sound governance. And we've chosen ADGM as our hub to launch business in the United Arab Emirates (UAE) in 2023,” he added.

Singapore has maintained a conservative regulatory framework designed to protect retail investors, Imbach said, while Hong Kong is actively working to attract companies and talent. Although the US has been slower to establish a defined regulatory stance, recent developments suggest it may soon accelerate, potentially surpassing others in market scale once its approach is formalised. 

Importantly, the business layer in digital assets has expanded rapidly, driving a significant increase in transactions across the ecosystem. Supported by a combination of infrastructure investment and improved institutional adoption, Sygnum’s first half of 2024 profit was driven by strong business performance, including a 500% rise in crypto derivatives trading, more than 360% increase in loan volumes and over 1,000 daily trades with more than 20 business to business (B2P) partner banks, servicing more than a third of Swiss banks.

“As a Swiss bank, Sygnum’s strong compliance and off-balance-sheet structure for crypto and traditional assets have fostered trust, especially after industry setbacks in 2022 and 2023 that highlighted counterparty risks,” Imbach said.

While infrastructure was in the past a significant barrier to institutional adoption, the industry has made considerable advancements. Yet, institutional adoption of digital assets remains in its infancy and requires time to build momentum, according to Imbach.

“Trust is still being rebuilt following recent industry upheavals, and institutions are awaiting the rollout and integration of regulatory frameworks, some of which are yet to be fully implemented. Even after these frameworks launch, adapting them to practical use will take time,” he cautioned.

A critical next step for the industry is to shift its focus from complex technology discussions to delivering user-friendly products and compelling investment opportunities. “These offerings need to match or exceed traditional financial products in returns and efficiency, demonstrating clear benefits to clients. So far, tokenisation efforts have largely been experimental and not for large-scale application,” he admitted.

Achieving scale by bringing more transactions on the infrastructure and clear value in these solutions remains essential for broader industry progress. Imbach said, “We’re focused on scaling and internationalising our existing products, bringing more activity onto our infrastructure. At the same time, we’re dedicating around 20% to 30% of our efforts to pioneering compliant access to decentralised finance (DeFi) infrastructure, exploring how smart contracts can link seamlessly with banking services under regulatory guidance.”

Sygnum remains technology-neutral, favouring public, permissionless blockchains for their flexibility, though it may work with permissioned blockchains for specific initiatives like Project Agora. Imbach acknowledged that the current blockchain landscape is highly fragmented, with numerous networks operating in silos, hampering broader adoption. He said, “While various technologies claim interoperability capabilities, none has achieved full-scale integration.” He also recognised the challenge of merging digital asset infrastructure with traditional banking systems.

The digital asset bank has developed a modular microservice infrastructure with defined application programming interfaces (APIs), enabling banks with varied systems to connect through selected modules. Beyond this layer, Sygnum does not get involved. Each bank’s internal teams then handle integration into their processes, with timelines ranging from a few months up to two years, depending on the bank's setup.

Sygnum's approach to collaborating with banks emphasises clearly defining product boundaries and engaging relevant teams early in the process, including compliance, risk, business, technology, and executive teams. “Banks vary widely in their digital asset strategies, typically asking three key questions: whether to engage in digital assets, whether to build or partner for infrastructure, and how to manage partnerships. Some banks prefer to integrate vertical services like custody and compliance into their operations, while others seek a managed, all-in-one service,” he said.

Sygnum Bank’s digital assets business is growing amid a secure and regulated-landscape, bridging digital and traditional finance.  With regulatory progress made in the US, Europe, the Middle East and Asia, Sygnum anticipates 2025 as a critical period for broader adoption.