Standard Chartered has agreed to provide digital asset custody services for 21Shares, one of the globe’s foremost issuers of crypto Exchange Traded Products (ETPs). This move signifies a deeper commitment by traditional financial institutions (TradFi) to the cryptocurrency sector.
However, the announcement raises immediate questions regarding the future positioning and role of Zodia Custody, the digital asset custodian that Standard Chartered co-founded.
21Shares intends to provide institutional investors with a wider and more secure range of solutions by utilizing Standard Chartered’s extensive global experience. Specifically, the collaboration leverages the bank’s status as a top international cross-border institution, its rigorous risk management protocols, and its innovative digital asset custody services.
By integrating a major bank’s services, the collaboration aims to foster a more mature and reliable environment for the adoption of cryptocurrencies and their related products.
“We are excited to offer our digital asset custody services to ETP providers and other institutions, enabling them to meet the highest standards of safety and compliance. Working with 21shares as their digital asset custodian allows us to extend our expertise into the fast-evolving digital asset ecosystem and support digital asset-linked products, providing institutional investors with the assurance they require,” Margaret Harwood-Jones, Global Head of Financing and Securities Services at Standard Chartered, stated.
The Zodia Question
Zodia Custody is a crypto-native custodian that 21Shares partnered with in late June 2024. As of now, it is unclear whether the new arrangement will result in Standard Chartered replacing Zodia Custody entirely or if the two entities will continue to operate in parallel for 21Shares.
This shifting landscape reflects a broader industry trend where established financial institutions are increasingly launching proprietary crypto services, often leveraging their reputation to compete with specialized crypto firms.
Other Major Financial Institutions Follow Suit
Standard Chartered is not alone in deepening its crypto involvement. Several other major banks are making similar strategic moves.
US Bancorp, a large US multinational financial services firm, re-entered the crypto market in September. It relaunched its digital asset custody services, targeting investment managers specifically. This service had originally debuted in 2021 but was discontinued due to a challenging regulatory environment at the time.
In mid-August, reports indicated that Wall Street heavyweight Citigroup is currently considering plans to offer both cryptocurrency custody and payment services.
Apart from this, a similar trend extends to Europe. In July, Deutsche Bank, Germany’s largest bank, revealed its plans to allow clients to store cryptocurrencies, which aligns with a wider push in the nation.