Swiss-based global digital asset banking group Sygnum will invest $50 million in the Fidelity Institutional Liquidity Fund on behalf of its client Matter Labs. Those funds will be tokenized as the first step in Matter Labs’ long-term strategy to move all of its treasury reserves on-chain with institutional custodians.
The funds will be tokenized onto the Ethereum-based zkSync layer-2 blockchain, which Matter Labs curates. The tokenized funds will represent part of Matter Labs’ holdings in the Fidelity Institutional Liquidity Fund, an open-ended $6.3-billion umbrella for money-market funds that is domiciled in Ireland.
The funds are intended to provide transparency for Matter Labs’ proof of reserves. Matter Labs senior vice president of business and operations Marco Cora said in a statement, "Moving USD 50m of our treasury reserves onto the zkSync blockchain showcases its institutional-grade security as well as our commitment to transparency.”
This is the first time Sygnum has tokenized traditional securities. Sygnum co-founder and group CEO Mathias Imbach commented on the deal at Digital Asset Summit 2024, currently underway in London. He said:
“We believe in permissionless public blockchains, but at the same time, we believe in compliance and the value of compliance, regulation, etc. So we see a role in helping the different ecosystem players to work together.”
The zkSync blockchain was founded in 2018 to provide scalability to Ethereum DApps. Its public mainnet was launched in April 2023 after receiving $200 million in Series C funding in November 2022. It reached a high of $870 million in total value locked (TVL) on March 10 and had $715 million TVL on March 19, according to L2BEAT.
Related: Matter Labs co-founder proposes ‘Ethereum Supreme Court’ for on-chain disputes
Sygnum claimed to be the first bank to tokenize its own assets in 2020. It began offering its clients access to cryptocurrency staking the same year, beginning with Internet Computer and Tezos, adding Ether the following year and Cardano in 2022.
The Sygnum Singapore subsidiary of the bank received a Major Payment Institution license in October 2023, allowing it to offer crypto brokerage services to accredited investors and institutions. Sygnum does not accept United States clients.
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