With a digital asset collateral pool worth approximately $10.5 billion, MakerDAO, the Decentralized Autonomous Organization (DAO) that administers the DAI cryptocurrency, has emerged as a significant force in decentralized finance. (DeFi) and the wider crypto ecosystem.
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So when the lending platform vote in favor of diversifying the DAI collateral pool away from pure crypto assets and into US government and corporate bonds, this represented a critical turning point for two conjoined economic systems.
While previously the flow of money was overwhelmingly from fiat to crypto assets, the decision to include traditional bonds in the DAI collateral pool demonstrates the increasingly two-way movement between interconnected crypto and legacy investment tools of today.
And to build and maintain the bridge between new-school crypto assets and old security and currency markets, a special kind of bank is needed that has one foot in both worlds.
In the first phase of its diversification strategy to convert half a billion in crypto assets into fiat-backed assets, MakerDAO has selected Swiss bank Sygnum as lead partner.
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Sygnum’s crypto-to-fiat gateway will first convert $250 million of DAI’s crypto collateral into USD. This will then be diversified into traditional assets through a portfolio of fixed income funds from BlackRock.
The involvement of the world’s largest asset manager, whose Swiss division contributed to the portfolio analysis, also signals the continued movement of stablecoins like DAI into the financial mainstream. Previously, Blackrock helped Circle with a similar collateral diversification strategy for its dollar-pegged cryptocurrency – USD Coin.
Read More: With Blackrock Partnership, Stablecoin Issuer Circle Gets Closer to the Mainstream
Explaining the reasoning behind the portfolio diversification partnership, Rajiv Sainani, head of growth at MakerDAO Europe, said it highlights how “innovation and the real benefits of traditional assets” are driving the DeFi-enabled financial revolution forward. .
“Sygnum’s DeFi credentials, regulated banking experience, and two-way crypto-traditional finance bridge were seen as key to securing overwhelming support from the Maker community,” Sainani added.
Catering to new and old silver
Certainly, the arrival of licensed banks in the crypto space signals a new maturity in the ecosystem. And what better country to usher in a new era of crypto credibility than one of the oldest and most established banking systems in the world?
Since its inception, Sygnum has made it its mission to systematically and comprehensively integrate digital assets into regulated banking services. And in addition to helping organizations like MakerDAO manage their crypto portfolios, it also serves as a regulated gateway to the world of crypto investing.
Armed with its Swiss banking license and an asset management license in Singapore, the financial institution (FI) adds an important layer of confidence that opens the door for institutional investors looking to immerse themselves in the world of assets. digital.
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But Sygnum is not the only Swiss bank looking to bring crypto to the tighter and more conservative corners of the financial industry.
In recent years, Zug-headquartered SEBA Bank, Switzerland’s first regulated crypto bank, has also become a significant global player in crypto banking, seeking to serve the growing number of businesses that generate crypto income.
At the same time, the bank offers structured investment products and institutional-grade digital asset custody to FIs looking for a trusted partner to support their activities in the cryptosphere.
Digital vaults for crypto assets
Traditionally, Swiss banks are considered to be among the safest in the world with a high level of protection against fraud, making the Alpine nation a top destination for businesses and individuals looking to protect their wealth.
On the same subject: Switzerland breaks neutrality and freezes Russian assets
In the digital equivalent of the country’s Alpine gold vaults, companies like Sygnum and SEBA have deployed state-of-the-art custodial solutions, including “hot storage” and “hot storage” crypto wallets. cold “.
Hot storage refers to internet-connected wallets and is therefore more convenient for people who need quick access to their crypto assets. In this area, another Swiss company, Taurus, has become one of the leading providers of crypto asset infrastructure for banks and FinTechs, including Sygnum. Taurus is also betting on the emerging field of tokenized securities with its TDX digital exchange.
Cold wallets, on the other hand, are separate hardware devices that require an internet connection to process transactions, which means crypto bank solutions are more like the traditional image of high-security vaults.
To ensure maximum security, SEBA, for example, built the “Faraday Cage”, a custom-built radio frequency shielded safe protected by several biometric access controls behind which the hardware that stores the cryptographic keys is secured.
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