Sygnum and DeFi Forge Bitcoin-Backed Loans With Multi-Sig Wallet Control: A New Era for Institutional Crypto Finance

Introduction: Bridging Banking and Bitcoin Sovereignty

In a landmark development for the digital asset industry, Swiss digital asset bank Sygnum Bank has partnered with non-custodial BTC lending startup Debifi to launch what they describe as the first bank-backed loan platform that doesn't require borrowers to relinquish full control of their bitcoin. Announced on October 24, 2025, from Lugano, Switzerland, the MultiSYG platform represents a significant evolution in crypto-backed lending, targeting institutions and high-net-worth individuals who seek banking services without compromising asset sovereignty. Scheduled to open in the first half of 2026, this initiative addresses longstanding concerns about collateral reuse and custodial risk that have plagued both traditional finance and earlier crypto lending models.

This collaboration emerges as the market for digital asset-backed financial products matures beyond the failed experiments of crypto lenders like BlockFi and Celsius. Unlike previous cycles where centralized platforms created single points of failure, MultiSYG introduces a multi-signature wallet structure that allows borrowers to maintain partial control and on-chain verification of their collateral throughout the loan term. "Borrowers shouldn't need to trust a custodian blindly," stated Debifi CEO Max Kei, highlighting years of pent-up demand for non-custodial lending solutions that now finally reach institutional grade.

The Architecture of Trust: How Multi-Signature Wallet Control Works

The technical foundation of MultiSYG represents a sophisticated blend of traditional banking security and blockchain transparency. Unlike conventional bitcoin-backed loans where lenders require full custody—effectively locking borrowers out of their assets until repayment—MultiSYG implements a five-party wallet structure. This arrangement includes Sygnum Bank, the borrower, and independent signers, with any movement of collateral requiring three signatures to authorize.

This multi-signature approach fundamentally alters the risk dynamics of crypto-backed lending. By distributing control among multiple parties, the system prevents any single entity from unilaterally moving or rehypothecating the bitcoin collateral. Rehypothecation—the practice where lenders reuse client collateral to back other transactions—has been a common but controversial feature in traditional finance that many institutional crypto participants seek to avoid. The MultiSYG model ensures borrowers can continuously verify the existence and security of their funds on-chain throughout the loan duration, providing unprecedented transparency for a banking-grade financial product.

Pascal Eberle, Bitcoin@Sygnum and MultiSYG initiative lead at Sygnum Bank, explained the significance of this architecture: "[This] combines the best of both worlds — the ability to hold your own keys while accessing regulated banking products and white-glove service. Borrowers can benefit from bank-grade terms in pricing, drawdown flexibility and loan duration, while keeping cryptographic proof of their holdings and partial control of their BTC."

Institutional Evolution: From Celsius Collapse to Regulated Innovation

The development of MultiSYG must be understood within the context of crypto lending's troubled history. The 2022 collapses of centralized lenders like BlockFi and Celsius demonstrated the vulnerabilities of models where users surrendered complete control of their assets to third parties. These platforms offered attractive yields but operated with insufficient transparency, ultimately creating systemic risks when market conditions deteriorated. Their failures resulted in billions in lost customer funds and regulatory scrutiny that reshaped the industry landscape.

Sygnum and Debifi's partnership signals a maturation beyond these early failures toward more resilient structures. Where previous crypto lenders concentrated risk through opaque practices, MultiSYG distributes control through transparent, on-chain mechanisms. Where earlier models prioritized accessibility over security for retail users, the current offering targets institutions and high-net-worth individuals demanding both sophistication and safety. This evolution reflects broader industry trends where institutional participants increasingly drive product development toward regulated, transparent, and technically robust solutions.

The timing of this announcement coincides with growing institutional adoption of bitcoin as a treasury asset and collateral type. As more corporations, funds, and wealthy individuals accumulate significant bitcoin holdings, the demand for financial products that allow leveraging these assets without selling them has increased substantially. MultiSYG addresses this demand while incorporating lessons learned from previous industry failures.

Market Positioning: Where MultiSYG Fits in the Evolving Crypto Lending Landscape

MultiSYG enters a crypto lending market that has diversified significantly since the 2022 downturn. The platform occupies a unique position between traditional banking services and decentralized finance (DeFi) protocols. Unlike purely DeFi lending platforms that operate with smart contracts but may lack regulatory clarity, MultiSYG combines blockchain technology with Swiss banking regulation. Conversely, unlike traditional banks offering crypto-backed loans that require full custody transfer, MultiSYG preserves borrower control through its multi-signature structure.

The partnership between Sygnum Bank and Debifi represents a convergence of complementary expertise. Sygnum brings banking regulation, institutional credibility, and experience with high-net-worth clients. Debifi contributes specialized knowledge in non-custodial bitcoin lending technology and blockchain infrastructure. This collaboration mirrors other institutional developments in the space, such as AMINA Bank's recent partnership with Tokeny to build compliant tokenization infrastructure using the ERC-3643 standard.

While specific terms regarding loan-to-value ratios, interest rates, and minimum loan sizes haven't been disclosed, the platform promises "bank-grade terms in pricing, drawdown flexibility and loan duration." This suggests competitive offerings compared to both traditional banking products and existing crypto lending services, potentially attracting borrowers who have been hesitant to engage with either extreme—fully custodial traditional services or purely algorithmic DeFi protocols.

Broader Implications for Digital Asset Banking and Regulation

The MultiSYG initiative reflects several significant trends in digital asset banking beyond just lending. The emphasis on multi-signature control aligns with growing regulatory expectations around asset protection and transparency. Switzerland's progressive approach to digital asset regulation has enabled innovations like this to emerge from its banking sector, potentially setting precedents for other jurisdictions.

The platform's structure also demonstrates how traditional financial concepts are being reimagined for blockchain-native assets. Collateral management, a cornerstone of secured lending, transforms when implemented through multi-signature wallets and on-chain verification. This approach could influence how other banking products—from structured products to derivatives—incorporate blockchain technology to enhance transparency and reduce counterparty risk.

Furthermore, the collaboration between a regulated bank and a specialized DeFi startup suggests a pattern of convergence between traditional finance and blockchain innovation. Rather than competing directly, established financial institutions and agile blockchain companies are increasingly partnering to develop hybrid solutions that leverage the strengths of both worlds. This model may become more prevalent as digital assets continue moving toward mainstream financial services.

Conclusion: The Path Forward for Sovereign Crypto Finance

Sygnum Bank and Debifi's MultiSYG platform represents a significant milestone in the evolution of crypto-backed lending—one that addresses critical shortcomings of previous models while incorporating the benefits of both banking regulation and blockchain technology. By enabling borrowers to maintain partial control over their bitcoin collateral through multi-signature wallets, the service offers a compelling alternative to both fully custodial traditional loans and purely algorithmic DeFi protocols.

The development signals broader maturation in digital asset financial services, where institutional demands for security, transparency, and regulatory compliance are driving innovation beyond retail-focused products. As Pascal Eberle noted, this approach truly combines "the best of both worlds"—banking sophistication with bitcoin sovereignty.

For market participants, MultiSYG's launch in the first half of 2026 warrants close attention as a potential blueprint for future digital asset banking products. Its reception among institutions and high-net-worth individuals will test whether distributed control structures can achieve widespread adoption in regulated finance. Additionally, observers should monitor whether similar models emerge for other digital assets beyond bitcoin and whether other regulated banks follow Sygnum's lead in partnering with specialized DeFi providers.

As the digital asset industry continues evolving beyond the shadows of past failures, innovations like MultiSYG demonstrate how lessons learned are being incorporated into more robust, transparent, and user-centric financial products. This progression toward solutions that respect both financial sophistication and individual sovereignty may ultimately define the next chapter of crypto finance.