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Switzerland-based Sygnum Bank is making waves in the crypto industry by expanding its off-exchange custody platform, Sygnum Protect, to include Deribit, a leading crypto derivatives exchange. This strategic move, announced on Wednesday, aims to enhance security and liquidity access for institutional traders.
What does this mean for institutional traders?
Sygnum Protect, launched in early 2024, is an innovative custody service designed for institutional crypto investors. By integrating with Deribit, traders can now securely store their assets with Sygnum, a fully regulated bank, while seamlessly accessing Deribit’s trading platform.
The integration leverages Fireblocks’ cutting-edge off-exchange technology, allowing traders to mirror their assets held in Sygnum’s custody onto Deribit. This means they can use Deribit’s trading tools without compromising security or control over their assets.
Addressing counterparty risks in Crypto trading
Crypto markets have witnessed repeated cycles of counterparty risk concerns, with recent major cyberattacks prompting traders to seek safer alternatives.
“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,” noted Dominic Lohberger, Sygnum’s Chief Product Officer. “This is yet another reminder that separating crypto custody from exchange trading is essential for security. Sygnum Protect is an essential building block for strengthening the resilience of the crypto industry.”
For institutional traders, the challenge lies in the fact that many trading platforms act as both exchanges and custodians, creating security vulnerabilities. Sygnum Protect’s integration with Deribit provides a much-needed solution by ensuring that assets remain in the custody of a regulated bank while still being available for trading.
Deribit CEO Luuk Strijers emphasized the benefits of the partnership, stating, “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 the capabilities and security assurances they require to trade any of Deribit’s leading products comfortably.”
The Fireblocks technology behind this integration enables firms to programmatically lock assets in their own wallets while mirroring collateral to exchanges. This ensures that traders maintain full custody of their assets at all times, mitigating risks associated with exchange insolvency or cyber threats.
Michael Shaulov, CEO of Fireblocks, highlighted the significance of this move: “This integration with Sygnum Protect and Deribit demonstrates the power of Fireblocks Off-Exchange. Exchanges and custodians can now leverage our standardized integration without requiring custom development—accelerating institutional adoption so assets can be securely held via regulated bank custody.”
Deribit expands to Hong Kong amid growing Crypto adoption
Beyond this integration, Deribit is also eyeing expansion into Hong Kong as the city positions itself as a global hub for digital assets. With increasing interest from family offices and asset managers, Deribit sees Hong Kong as a prime location for growth.
The expansion aligns with Hong Kong’s Securities and Futures Commission (SFC) roadmap to develop its virtual asset ecosystem. As part of this initiative, the city is exploring the introduction of virtual asset derivatives tailored for professional investors with portfolios exceeding HK$8 million (approximately US$1 million).
The future of secure Crypto trading
With growing concerns over exchange security, institutional traders are seeking solutions that offer both safety and liquidity. The partnership between Sygnum, Deribit, and Fireblocks represents a step toward a more resilient crypto industry—one where traders no longer have to choose between security and market access.
As crypto adoption continues to rise, regulated custody solutions like Sygnum Protect will play an essential role in shaping the future of institutional trading. With Deribit’s expansion plans also on the horizon, the market is set for a transformative shift in how digital assets are stored and traded securely.