Sygnum, a global digital asset banking group, has expanded Sygnum Protect, its off-exchange custody platform, to include Deribit, one of the largest crypto derivatives exchanges. This integration allows institutional traders to store assets in a regulated bank while accessing Deribit’s trading platform.

Off-Exchange Custody and Trading Access

According to Sygnum, the integration with Deribit utilizes Fireblocks’ Off Exchange solution, enabling traders to mirror assets held in Sygnum’s custody while executing trades on Deribit without pre-funding accounts.

By separating custody from trading, Sygnum Protect reduces counterparty risk and removes the need to pre-fund exchanges. Assets remain off-balance-sheet, offering security against exchange defaults and operational risks.

Managing Counterparty Risk in Crypto Trading

“Counterparty risk awareness in crypto comes in cycles, and the recent major cyber-attack has triggered one of the largest waves of exchange de-risking since FTX,” said Dominic Lohberger, Sygnum’s Chief Product Officer. “Separating crypto custody from exchange trading is essential for security.” he added.

Institutional crypto trading often involves platforms that act as both custodians and trading venues, increasing security concerns. The collaboration between Sygnum, Deribit, and Fireblocks is designed to address these risks.

Fireblocks’ Off Exchange solution allows trading firms to retain control over their assets while conducting trades. Firms can lock assets in wallets they control and mirror collateral to exchanges without relinquishing custody. The assets remain segregated, and on-chain settlement is used to prevent risks related to hacks, bankruptcy, or fraud.

Sygnum’s Journey in Crypto Banking

Sygnum has been a pioneer in bridging traditional banking with the crypto sector. As the world's first digital asset bank, it secured a banking license from Switzerland’s financial regulator (FINMA) in 2019, allowing it to offer regulated crypto services.

Over the years, Sygnum has expanded its offerings, including digital asset custody, tokenization, staking, and institutional-grade trading services. It was also one of the first banks to provide custody for Ethereum staking and tokenized assets.

This integration sheds light on the growing convergence between traditional banking and the crypto sector, demonstrating how financial institutions are adapting to the digital asset economy.