Sygnum Bank tokenized $50 million of assets in a Fidelity International's money-market fund on zkSync for Matter Labs, the developer behind the Ethereum scaling network, according to a Tuesday press release.

The security tokens represent Matter Labs' holdings in Fidelity International's Institutional Liquidity Fund, which has $6.9 billion of assets under management. This was the first instance of using Sygnum's multichain tokenization offering of traditional investments, the Switzerland-based bank said.

The move was part of Matter Labs' long-term goal to move its reserves into a blockchain environment.

Creating blockchain-based tokens of traditional investments such as bonds and funds – known as tokenization of real-world assets (RWA) – is an increasingly popular use case for blockchain technology as digital assets and traditional finance (TradFi) become more intertwined. Tokenized U.S. Treasuries, for example, have grown to a $730 million asset class from $100 million in early 2023 as crypto firms seek to earn a steady yield by parking their on-chain funds.

Tokenization can increase transaction settlement speed and transparency while reducing the administrative burden, and global institutions such as Citi, JPMorgan and Franklin Templeton are testing the technology.

"Working with Fidelity (International) and utilizing zkSync, Sygnum leverages both the power of the blockchain and the experience of a global tier 1 investment manager," Fatmire Bekiri, Sygnum's head of tokenization said in a statement. "It's a prime illustration of our mission to connect crypto and TradFi and build future finance on-chain."