Sygnum, a digital asset manager that offers custody, brokerage, lombard credit and tokenization services to institutional and qualified private investors, describes itself as the “world’s first digital asset bank.”
On October 31, 2019, the group announced it had obtained a capital markets services license from the Monetary Authority of Singapore (MAS). This came after it obtained a banking and securities dealer license from the Swiss Financial Market Supervisory Authority (FINMA) in August 2019.
With licensure from two of the world’s most innovative financial centers, Sygnum may be in a better position to onboard institutional investors into the bitcoin and cryptocurrency markets. Its approval process in Singapore in particular may also portend the growth of the cryptocurrency industry in a welcoming environment.
New Regulatory Approval, New Institutional Investors
Though the regulatory approvals are relatively recent, Sygnum already had roots in Singapore and Switzerland. It's backed by Singtel Innov8, the venture capital arm of Singaporean telecoms company Singtel Group. The digital asset bank also has a team of advisors made up of experienced Swiss bankers, including ex-Swiss National Bank president Philipp Hildebrand and former UBS CEO Peter Wuffli.
Mathias Imbach, co-founder and CEO of Sygnum, told Bitcoin Magazine that he was impressed by the professionalism and openness of the Singaporean regulators throughout its license application process. He also highlighted Sygnum’s emphasis on adhering to AML requirements, something that undoubtedly made the process easier.
“Anti-money laundering safeguards are always a pressing concern for regulators, and a challenge that is faced by every financial institution today,” Imbach said. “This translates even more so to digital assets. We have developed proprietary frameworks and tools around this topic, which are specifically designed for the digital asset economy and are key in helping us stay ahead of the regulatory requirements.”
Following this approval, Sygnum will be launching a multi-manager fund, which will allocate investments across several managers that “tap into the global digital asset opportunity using different and uncorrelated investment strategies,” according to the company announcement.
The firm sees this as an opportunity to fill a need that’s still apparent in the space — investment options that give institutions the benefits of digital assets while mitigating the risks that still make many of them wary from participating.
“This approach provides exposure to the potential returns of the emerging digital asset economy while diversifying the investment risk,” Imbach said. “Together with a rigorous manager and operational due diligence process, this fund is a responsible and prudent way for accredited and institutional investors to get exposure to digital assets.”
Progressive Policies Pay Off for Singapore
Singapore has long been attractive for bitcoin and bitcoin-based businesses. Aside from being a general fintech hotspot on the Asian continent, the country has embraced emerging technologies of all kinds.
Particularly laudable are the government’s efforts to provide a structured, regulated environment where cryptocurrency and blockchain firms can work. On October 16, 2019, Loo Siew Yee, an assistant managing director at MAS, gave a speech at the International Compliance Association Annual APAC Conference.
The speech, which was titled “Combating Financial Crime through New Technologies Built on Strong Fundamentals,” highlighted Singapore’s potential as an environment that fuels the cryptocurrency sector and the authority’s commitment to fight crime as more cryptocurrency-based businesses set up shop there.
“Given Singapore’s position as a major financial and fintech centre, it is natural that DPT [digital payment token] firms would wish to set up here,” Yee said. “In preparation for new DPT licensees next year, MAS has started to enhance our supervisory and surveillance capabilities to facilitate the proactive detection of unlicensed DPT activities, and to use ‘real-time’ data gathering to enhance our assessment.”
Predecating this stance in August 2019, the Association of Cryptocurrency Enterprises and Startups, Singapore (ACCESS), a trade association, released a code of practice for cryptocurrency companies, noting best practices for AML and countering the financing of terrorism.
“In essence, the code of practice helps banks and industry players to sieve out the ‘bad,’ so that quality licensed blockchain and crypto-asset businesses can grow here in a bigger way and make a stronger imprint on the global stage,” Anson Zeall, the chairman of ACCESS, explained in a press release at the time.