Sygnum, a regulated digital asset bank, founded in Switzerland and Singapore, started in 2017 with the idea of providing a secure, agile infrastructure and operations for investors to invest in digital assets with complete trust.
The bank offers a full range of regulated digital asset banking services across fiat and cryptocurrencies for professional and private qualified investors. This includes crypto trading, custody, staking, lending and asset token issuance with our token marketplace.
Today it employs almost 200 people although its entrepreneurial start-up roots remain, especially as its services and products continue to challenge the idea of what crypto assets can do and complement the domain of traditional finance.
In 2021, our multi-manager fund-of-funds product performed extraordinarily well - Katalin Tischhauser
In part one of a two-part article, Katalin Tischhauser (pictured), head of discretionary solutions and investment research, Sygnum Asset Management, talked to SRP about the bank’s strategic mission, its highlights in 2021, and the challenges with exchange-traded products (ETPs).
“I work on our growing range of asset management products,” said Tischhauser. “Our goal is to provide the institutional experience and products that you expect from a bank in both traditional and alternative asset classes plus the depth of research, expertise and relationships that you find in the digital asset investing ecosystem.”
Sygnum’s strategic mission is to realise Future Finance; a future where everyone can invest in digital assets with complete trust.
“Our banking infrastructure was built from the ground up to offer institutional-grade security and is the platform for our fast-growing integrated portfolio of services.
“These range from our convenient fiat-digital asset gateway, segregated accounts with multi-level security, to our full range of banking services including 24/7 trading, staking to generate yield, Lombard loans as well as the corporate finance-side of crypto assets,” said Tischhauser.
According to Tischhauser, key highlights in 2021 included the performance, growth and Sygnum’s growing range of funds, which include both a venture equity fund, a DeFi investment vehicle and a cryptocurrency fund-of-funds.
“In 2021, our multi-manager fund-of-funds product performed extraordinarily well. It outperformed the market and its benchmark by several hundred percent.
“Another highlight is the growth of our Assets under Management for this fund to over CHF100m, and our first two products combined reached over CHF 200m since we started in 2017. This is part of Sygnum’s more than CHF 2 billion assets under administration. These are significant milestones, because at this threshold, the product is considered institutional,” said Tischhauser.
Sygnum has also been broadening its product range and its DeFi+ Core investment strategy, an actively managed certificate (AMC) for exposure to decentralised finance, was one of the first in a range of half a dozen additional products that it is launching.
“These products fit together like pieces of a mosaic, addressing different sectors and segments of the market. They will allow investors to define what part of the market they want to be exposed to. Our research publishing for clients gives background on the product sectors, which has expanded to include investment research as our team grows,” said Tisschhauser.
AMCs, ETPs, and ETFs
Katalin Tischhauser: We look at what is most in demand and what structure is convenient, versus the cost and overhead that is involved in creating the product. Fund products, for example, are very expensive, and as they do not always have significant liquidity, they are not always useful for investors. Depending on the fund jurisdiction, regulation sometimes mandates a high minimum investment. This can further restrict the liquidity.
The alternatives that offer benefits in this area include AMCs and exchange-traded products (ETPs). In general, AMCs are interesting because they can enable access to a more diverse range of crypto assets, and they can offer more liquidity than a typical hedge fund does. An AMC can offer daily liquidity with more convenience than a fund.
ETPs, which are like an exchange-traded fund (ETF) in Switzerland, are legally classed as fixed income instruments. ETPs behave like an ETF, as they trade in real time on an exchange, but this brings distinct requirements, such as a need for real-time liquidity, for example.
SIX Swiss Exchange
Katalin Tischhauser: One challenge with ETPs in crypto assets are the underlying instruments that a given exchange, such as the SIX Swiss Exchange, may allow. Often the list of cryptocurrencies is rather short. The Sygnum ETP gives exposure to the largest blockchain tokens and cryptocurrencies.
Looking at other market segments, like decentralised finance, often smaller crypto tokens are not included by major exchanges, and as a result, our alternative investment structures let investors access these segments securely and conveniently.
Switzerland is a strong participant with advanced regulation and market participation that leads in Europe and many other markets around the world. A good example of this is the Swiss DLT law whose first provisions came into force in February 2021. Like Sygnum, SIX is also a leader in Switzerland and internationally, being the first traditional finance exchange to offer cryptocurrencies, operating within the broader Swiss regulatory frameworks.
Other markets limit the access still, such the US, where ETFs have been allowed for the first time based only on Bitcoin futures – offering investors indirect exposure to the underlying crypto asset.