Sygnum Bank and Deribit Revolutionize Crypto Custody with Fireblocks Integration

In a groundbreaking move, Sygnum Bank, a leading digital asset bank, has expanded its custody services to include Deribit, the world’s premier crypto options exchange. This collaboration leverages Fireblocks’ innovative "Off Exchange" service, enabling traders to securely mirror their assets on trading platforms while maintaining custody with a regulated bank. This development marks a significant step forward in addressing counterparty risks and enhancing security in the crypto trading ecosystem.

What is the "Off Exchange" Service?

Fireblocks’ "Off Exchange" service is a cutting-edge solution designed to mitigate the risks associated with holding assets on trading platforms. Traditionally, traders deposit their crypto assets directly on exchanges to access liquidity and trading opportunities. However, this practice exposes them to significant risks, such as exchange hacks or insolvencies. The "Off Exchange" service allows traders to keep their assets in a secure, regulated custody solution while still participating in trading activities. Essentially, it mirrors the assets held in custody on the exchange, ensuring that traders can access liquidity without compromising security.

Why This Matters for Crypto Traders

The integration of Sygnum Bank and Deribit through Fireblocks’ service is a game-changer for crypto traders. By holding assets in a regulated bank like Sygnum, traders can significantly reduce their exposure to counterparty risks. This is particularly relevant in light of recent high-profile hacks, such as the $1.4 billion breach of Bybit by the North Korean group Lazarus. Such incidents have underscored the importance of secure custody solutions in the crypto space.

Dominic Lohberger, Sygnum’s Chief Product Officer, emphasized the significance of this development: "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." This partnership ensures that traders can continue to access Deribit’s deep liquidity pools while safeguarding their assets in a secure environment.

Sygnum Bank: A Trusted Name in Digital Asset Custody

Sygnum Bank, headquartered in Zurich, has established itself as a trusted custodian for digital assets. With licenses in Switzerland, Luxembourg, and Singapore, Sygnum operates under stringent regulatory frameworks, offering clients peace of mind when it comes to asset security. The bank achieved a valuation of over $1 billion following a $58 million funding round in January 2024, further solidifying its position as a leader in the digital asset banking space.

Deribit: A Powerhouse in Crypto Derivatives

Deribit is renowned as one of the world’s leading crypto derivatives exchanges, boasting a trading volume exceeding $1 trillion in 2024. Its options volume alone reached an impressive $743 billion, making it a go-to platform for traders seeking liquidity and advanced trading tools. By integrating with Sygnum Bank, Deribit enhances its appeal to institutional and retail traders alike, offering a secure and seamless trading experience.

The Growing Importance of Secure Custody Solutions

The crypto industry has witnessed numerous exchange hacks and collapses over the years, highlighting the need for robust custody solutions. The FTX debacle in 2022 served as a wake-up call for the industry, prompting traders and institutions to prioritize security and regulatory compliance. Sygnum Bank’s partnership with Deribit addresses these concerns head-on, providing a secure alternative to traditional exchange custody.

How Fireblocks Enhances Security

Fireblocks, a leading digital asset custody platform, plays a pivotal role in this collaboration. Its "Off Exchange" service ensures that assets remain in secure custody while enabling traders to access exchange liquidity. This dual-layer security model minimizes the risk of asset loss due to exchange hacks or operational failures. By leveraging Fireblocks’ technology, Sygnum and Deribit are setting a new standard for secure crypto trading.

The Future of Crypto Custody and Trading

As the crypto industry matures, the demand for secure and regulated custody solutions is expected to grow. Partnerships like the one between Sygnum Bank and Deribit demonstrate the industry’s commitment to addressing security concerns and fostering trust among traders. This trend is likely to accelerate as more institutional players enter the market, driving the adoption of advanced custody solutions.

Key Takeaways for Traders

• Secure custody solutions reduce counterparty risks and enhance asset protection.
• Fireblocks’ "Off Exchange" service enables seamless trading without compromising security.
• Sygnum Bank’s regulatory compliance ensures a trusted environment for digital asset custody.
• Deribit’s liquidity and trading tools remain accessible while assets are securely held off-exchange.

In conclusion, the collaboration between Sygnum Bank and Deribit represents a significant milestone in the evolution of crypto custody and trading. By prioritizing security and regulatory compliance, this partnership sets a new benchmark for the industry, paving the way for a safer and more robust crypto ecosystem.