This is a segment from the Empire newsletter. To read full editions, subscribe.
One of the biggest narratives we’ve discussed a lot is the rise of institutional adoption.
Sygnum, the digital asset banking group, is no stranger to the shift and announced yesterday that it’s seen a 400% increase in its average annual growth in trading volumes since 2020.
“What we have seen over the past year and a half is a significant number of traditional institutional trading counterparties coming into the industry and gaining interest in using our solutions to delve into the space,” Sygnum’s Head of Corporate Clients, Néstor Palao, told me.
“We talk about brokerage firms, prime brokers, investment funds and family offices that see, in Sygnum, a regulated gateway into this industry. And this, I would say, indeed, is something that we have seen growing.”
But the change — and overall growth in the industry — has led to crypto projects themselves evolving.
Specifically, Palao noted that startups have been approaching Sygnum more and more. In the past, they’d just seek out a bank account so that they could pay employees or contractors, since traditional banks were, well, not so welcoming.
But over the last few years, projects have come to Sygnum and “professionalized themselves significantly.” Palao explained that these projects now have a finance department, not just a founding team, and “professionalize the management of their capital.”
“We see projects daily that launch a project; they manage to raise a significant amount of capital, or their token gains a lot of attention, and they end up sitting on a very significant balance of treasury assets,” he explained.
“In the beginning, it was purely to ‘Give me a bank account so I can pay my employees.’ Now, it’s still that, but it’s also a lot more about, ‘How can I properly manage my treasury of tokens? How can I hedge my exposure? How can I generate yield on my holdings?’”
What Palao told us lines up with what we’ve seen in other segments around crypto, too. Back in February, PitchBook’s Robert Le noted that the rebound in venture capital activity was pretty focused on “established” teams.
Oh, how time flies…
