Switzerland’s Sygnum has started to provide custody for the clients of Deribit, the largest cryptocurrency derivatives exchange, with its Sygnum Protect product. Providing third party custody reduces the counterparty risks involved in derivatives.
Sygnum is a regulated digital asset bank that provides crypto brokerage and/or custody services to more than 20 other banks. These include PostFinance, the banking arm of Switzerland’s post office.
The collapse of FTX in 2022 highlighted concerns in handing over custody of assets to exchanges. While that was the result of wrongdoing, other risks include hacking. Bybit’s recent massive $1.4 billion hack emphasizes this risk, although the exchange fortunately was able to cover the loss.
