Standard Chartered’s ventures unit, SC Ventures, is working with asset servicing provider Northern Trust to launch Zodia Custody, an institutional-grade custody solution for cryptocurrencies.
The goal of Zodia is to enable institutions to invest in emerging cryptocurrency assets. It ‘combines the traditional custody principles and expertise of a bank with the agility of a fintech company to provide an infrastructure that meets the high standards and expectations of institutional investors through a platform that adapts to the changing needs of clients in the market’, in the words of the press materials.
Pending regulatory approval, Zodia will provide custody services for Bitcoin and Ethereum, followed by XRP, Litecoin and Bitcoin Cash. These represent approximately 80% of total assets traded on the major cryptocurrency exchanges.
One of the primary areas of contention with regard to cryptocurrencies is how banks and other more traditional financial institutions can partner, rather than compete. In a blog post last month, Boston Consulting Group (BCG) noted how cryptocurrencies can be a ‘vehicle with great prospects’ for banks.
“The next few years will more than likely bring cryptocurrencies and DLTs into the mainstream,” BCG wrote. “Innovation in financial services is just beginning. The result will be new ways of handling payments, investments, and savings. And for the risks, the three solutions of know your transaction (KYT), structured regulatory compliance (SRC), and custodian services are adequate for the foreseeable future, unless circumstances change.”
“The introduction of digital custody backed by the know-how and experience of global banks is a breakthrough in the evolution and support of institutional cryptocurrency markets,” said Pete Cherecwich, president of corporate and institutional services at Northern Trust.
“Zodia’s robust capabilities will make it possible for institutional asset owners, family offices and asset managers to invest in a range of cryptocurrencies as interest continues to grow in these emerging and innovative financial instruments.”
The initiative is subject to registration with the UK Financial Conduct Authority.