Swiss-based digital asset banking group Sygnum has announced its plans to invest $50 million in the Fidelity Institutional Liquidity Fund on behalf of its client, Matter Labs. As part of its long-term strategy, Matter Labs aims to move all of its treasury reserves onto the blockchain with institutional custodians. In a bid to achieve transparency, the funds will be tokenized on the Ethereum-based zkSync layer-2 blockchain, which is managed by Matter Labs.
The tokenized funds will represent a portion of Matter Labs’ holdings in the Fidelity Institutional Liquidity Fund, an open-ended money-market fund based in Ireland with a total asset value of $6.3 billion. This move will enable Matter Labs to demonstrate proof of reserves. Marco Cora, Senior Vice President of Business and Operations at Matter Labs, emphasized that tokenizing the treasury reserves highlights the blockchain’s secure infrastructure and the company’s commitment to transparency.
This marks the first time that Sygnum has tokenized traditional securities. Mathias Imbach, Co-founder and Group CEO of Sygnum, expressed the company’s belief in the value of permissionless public blockchains, but also stressed the importance of compliance and regulation. Imbach sees Sygnum playing a role in facilitating collaboration between different players in the blockchain ecosystem.
The zkSync blockchain, which was established in 2018, aims to provide scalability to Ethereum DApps. It launched its public mainnet in April 2023 after securing $200 million in Series C funding in November 2022. According to L2BEAT, the blockchain reached a peak total value locked (TVL) of $870 million on March 10, with a current TVL of $715 million as of March 19.
Sygnum made headlines in 2020 as the first bank to tokenize its own assets. It has since offered its clients access to cryptocurrency staking, starting with Internet Computer and Tezos in 2020, followed by Ether in the subsequent year, and Cardano in 2022. Sygnum’s Singapore subsidiary obtained a Major Payment Institution license in October 2023, enabling it to provide crypto brokerage services to accredited investors and institutions. The bank does not accept clients from the United States.
This partnership between Sygnum and Matter Labs represents a significant step towards tokenizing traditional securities and further solidifies the role of blockchain in the financial sector.
I’m skeptical about the scalability of Ethereum-based blockchains. Will zkSync really be able to handle the volume?
Do we really need all these different blockchains? It just seems like unnecessary fragmentation to me.
Tokenizing treasury reserves? Sounds like a recipe for disaster. Good luck with that, Matter Labs.
This news further solidifies the role of blockchain in revolutionizing the financial sector. It’s an exciting time to be part of this digital transformation.