Stablecoins are an important source of liquidity, and as a regulated Swiss bank, Sygnum provides a convenient, secure bridge for stablecoins as the digital asset markets evolve.
by Dominic Lohberger, Head of Trading and SIS at Sygnum
What are stablecoins?
Stablecoins are cryptocurrencies designed to maintain a stable price based on a particular fiat currency, and they ensure this peg either through an asset-backed or algorithmic function. They provide an effective on and off-ramp between fiat currencies and crypto assets, and as such, stablecoins have become a central source of liquidity and a convenient gateway. Currently, the dominant and most accepted stablecoins are Circle’s USDC and Tether’s USDT.
Recent developments and risk management
Since the recent depegging of the Terra algorithmic stablecoin UST and the fallout of centralised lenders, market participants have become more attentive to managing counterparty risk. The stablecoin issuer constitutes an often-overlooked counterparty risk to their holders. Assessing their risk profiles with regards to applicable regulations and transparency of the issuer as well as the assets or algorithm that back the stablecoin are the most critical parts of risk management for stablecoin owners.
Sygnum provides a convenient bridge between the crypto and traditional financial markets as a trusted counterparty adhering to highest regulatory standards, and as a regulated Swiss bank, is directly supervised by the Swiss Financial Market Supervisory Authority (FINMA).
The advantages of Sygnum include the convenient all-in-one offering for stablecoin custody, trading and subsequent fiat payments or transfers. Stablecoins under custody with Sygnum are held offbalance sheet and as such are not exposed to counterparty risk. The stablecoin-fiat conversion at Sygnum is available for a low single-digit spread and converted assets can subsequently be transferred to Sygnum’s e-banking platform.
As a regulated Swiss bank, Sygnum provides its clients with a safe way to utilise stablecoins and weather market extremes with peace of mind and trust.
Please contact us here to learn more from our Trading team
Sygnum is the world’s first digital asset bank, and a digital asset specialist with global reach. With Sygnum Bank AG’s Swiss banking licence, as well as Sygnum Pte Ltd’s capital markets services (CMS) licence in Singapore, Sygnum empowers institutional and private qualified investors, corporates, banks, and other financial institutions to invest in the digital asset economy with complete trust. Sygnum operates an independently controlled, scalable, and future-proof regulated banking platform. Our interdisciplinary team of banking, investment, and Distributed Ledger Technology (DLT) experts is shaping the development of a trusted digital asset ecosystem. The company is founded on Swiss and Singapore heritage and operates globally. To learn more about Sygnum, please visit www.sygnum.com.
This document is purely for educational purposes and has been issued by Sygnum Group. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication. It does not constitute an offer or a recommendation to subscribe, purchase, sell or hold any security or financial instrument. It contains the opinions of Sygnum Group, as at the date of issue. These opinions and the information contained herein do not take into account an individual‘s specific circumstances, objectives, or needs. No representation is made that any investment or strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes personalized investment advice to any investor. Therefore, you must verify the above and all other information provided in the document or otherwise review it with your external advisors. Some investment products and services, including custody, may be subject to legal restrictions or may not be available worldwide on an unrestricted basis. The information and analysis contained herein are based on sources considered as reliable. Sygnum Group uses its best efforts to ensure the timeliness, accuracy, and comprehensiveness of the information contained in this document. Nevertheless, all information indicated herein may change without notice.
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