Swiss-based global digital asset banking group, Sygnum, has announced a $50 million investment in the Fidelity Institutional Liquidity Fund on behalf of its client, Matter Labs. As part of Matter Labs’ long-term strategy to move all of its treasury reserves on-chain with institutional custodians, the funds will be tokenized on the Ethereum-based zkSync layer-2 blockchain, which is curated by Matter Labs. These tokenized funds will represent a portion of Matter Labs’ holdings in the Fidelity Institutional Liquidity Fund, an open-ended $6.3 billion umbrella for money-market funds domiciled in Ireland.
The purpose of tokenizing the funds is to provide transparency for Matter Labs’ proof of reserves. Marco Cora, Senior Vice President of Business and Operations at Matter Labs, stated, “Moving $50 million of our treasury reserves onto the zkSync blockchain showcases its institutional-grade security as well as our commitment to transparency.”
This marks the first time that Sygnum has tokenized traditional securities. Mathias Imbach, Co-founder and Group CEO of Sygnum, commented on the deal at the Digital Asset Summit 2024, currently taking place in London. He stated, “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. According to L2BEAT, it reached a high of $870 million in total value locked (TVL) on March 10 and had $715 million TVL on March 19.”
Sygnum has previously been recognized as the first bank to tokenize its own assets in 2020. The bank has been offering its clients access to cryptocurrency staking since the same year, starting with Internet Computer and Tezos, and later adding Ether in the following year and Cardano in 2022.
Sygnum’s Singapore subsidiary received a Major Payment Institution license in October 2023, enabling it to offer crypto brokerage services to accredited investors and institutions. However, it should be noted that Sygnum does not accept clients from the United States.
In related news, there have been proposals from Matter Labs’ co-founder for the establishment of an ‘Ethereum Supreme Court’ to handle on-chain disputes. Additionally, there is growing interest in tokenizing music royalties as NFTs, which could potentially benefit artists like Taylor Swift.