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Finance
How the world’s first regulated digital asset bank started life as a technology company looking to acquire a banking license
You cover the entire value chain of digital assets, but are somehow different to other similar players in Switzerland. Could you explain how?
We cover everything from cryptocurrencies, to stable coins and asset tokens. Sygnum Bank was the first to be licensed as a fully regulated bank in the digital asset space, which by some was perceived as very risky and “too early”. We are a digital asset technology group with a banking license in Switzerland and a capital-markets-services license in Singapore, and we just raised US $90m in an oversubscribed Series B funding round.
Today, there are only two regulated banks in this space, Sygnum being one. Our setup means we have a dual headquarters that focuses on the interface between Europe and Asia. But we are not a bank with an IT department; we are a technology company with a banking license. And we currently empower nearly 1,000 clients, growing fast – institutional and private qualified investors, corporates, banks and other financial institutions – to invest in the emerging digital asset economy with complete trust.
The four co-founders and I realized in 2017 that the ability to transfer originals, not copies, without intermediaries from anywhere in the world as long as there is access to the internet is very disruptive. However, it also was a time where the early use cases and their implementation were perceived by many as quite detached from reality. That is, whenever great minds, founders and early technology adopters wanted to interact with traditional finance and, for instance, open a bank account to pay employees’ salaries the process was difficult to impossible.
We wanted to unblock it, so came up with a bridge between decentralized future finance and traditional finance, where 99% of money still is today. We also did so following the principle of “future has heritage”; that is to say we believe in the power of decentralization, but at the same time find it important to respect heritage, such as the need to know your customer, to follow anti-money laundering as well as to uphold investor suitability rules at all times.
You deal in wine. That’s the beauty of tokenization, isn’t it? It creates a new world of bankable and easily transferrable assets which were not bankable….
Exactly. The blockchain gives us a ledger which is always automatically updated so you know at any point in time who owns how much of object X or security Y; it helps to fractionalize objects people can own, such as one in a thousand of a wine portfolio that they would not usually be able to afford. That creates a new field of emotional investing and access to products that were not available before. In Switzerland, we are lucky in that we have complete regulatory and legal clarity via the new DLT law.
We have recently tokenized blue-chip NFT CryptoPunk #6808 using its Desygnate primary market issuance platform, and as of January 2022, CP6808 tradeable asset tokens are available exclusively to Sygnum clients for co-ownership on SygnEx, Sygnum’s secondary market. This represents the first step towards embracing the emerging NFT market and Web 3.0 experiences into Sygnum’s vision for Future Finance.
Being the world’s first digital asset bank comes with its pluses and minuses, doesn’t it?
Yes. Being first in the space means we have created the know-how and built the IP – even co-developed various measures with the regulator. We are proud to be able to play this role and committed to doing our part in helping to shape standards which allow regulated financial institutions to enter the exciting digital assets business while protecting the integrity of financial hubs such as Switzerland and Singapore. Another advantage is just market traction. We are, and forever will be, the world’s first digital asset bank; from a marketing standpoint, it helps in recruiting, with investors and with clients.
One of the disadvantages is charting new territory. Sometimes you create yield loss on the path of finding what works or not. In such cases, a fail-fast mentality is very important: to accept some costs and to then shift and forget, because even the losses have contributed to your knowledge of what works and what doesn’t.
On that – being CEO and indeed founder in this space – any words of wisdom?
I have a rule that I spend at least a third of my time every week with clients and partners. You learn a lot there: the pulse of the market, what do they need, what people want, and how to be a part of that selling process of our products.
I believe in reading a lot; however, getting one’s hands dirty is clearly more important. I have tried pretty much every DiFi liquidity pool protocol in some shape or form. You need to explore, both the fringes and the failed things, and accept it all. On the crypto side, you need to be on Twitter, Telegram, watch RealVision etc., but to be able to weave out 99% of what you read.
I would stress the importance of independent thinking and of having the conviction to follow through on what you believe in and what you have thought through, especially when people try to make you fearful that you’re doing something wrong. An entrepreneurial journey will always be constant oscillation between euphoria and terror – I enjoy this and am comfortable handling lots of ambiguity along the way.
Interview by Simone Grancini and Aksinia Stavskaya
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