Swiss-based global digital asset banking group, Sygnum, has made 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, these funds will be tokenized. The tokenization process will take place on the Ethereum-based zkSync layer-2 blockchain, which is maintained by Matter Labs. These tokenized funds will represent a portion of Matter Labs’ holdings in the Fidelity Institutional Liquidity Fund, a $6.3 billion money-market funds umbrella domiciled in Ireland.
The main purpose of tokenizing the funds is to provide transparency for Matter Labs’ proof of reserves. Marco Cora, the 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, the co-founder and Group CEO of Sygnum, commented on this development at the ongoing Digital Asset Summit 2024 in London. He mentioned that the zkSync blockchain was established in 2018 to enhance scalability for Ethereum DApps. Its public mainnet was launched in April 2023, following a Series C funding round that raised $200 million in November 2022. As of March 10, the zkSync blockchain had reached a total value locked (TVL) of $870 million, which decreased to $715 million by March 19, according to L2BEAT.
It is worth noting that Sygnum claims to be the first bank to tokenize its own assets in 2020. Since then, it has been offering its clients access to cryptocurrency staking, starting with Internet Computer and Tezos in the same year, followed by Ether in the following year, and Cardano in 2022. In October 2023, Sygnum’s Singapore subsidiary obtained a Major Payment Institution license, enabling it to provide crypto brokerage services to accredited investors and institutions. However, it does not accept clients from the United States.
In other related news, there has been a proposal by a co-founder of Matter Labs to create an “Ethereum Supreme Court” for on-chain disputes. Additionally, there is growing interest in tokenizing music royalties as NFTs, as it could potentially benefit artists like Taylor Swift in the future.