SC Ventures, the innovation and ventures unit of Standard Chartered, and Northern Trust, a leading provider of asset servicing, have entered into an agreement to launch Zodia Custody, an institutional-grade custody solution for cryptocurrencies.
Maxime De Guillebon, CEO of Zodia, said: “Zodia was established to address the need for a cryptocurrency custodian that truly understands custody.”
Cryptocurrencies already represent 0.3% of the world’s currency and bank deposits and are forecast to continue growing with a CAGR of 32% from 2019 to 20241. While there is increasing interest from institutional investors, they account for only 9% of investments in cryptocurrencies at present.
Zodia is designed to enable institutions to invest in the emerging cryptocurrency assets that are transforming how financial markets operate, including transaction and settlement activities.
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Under the agreement, which is subject to registration with the UK Financial Conduct Authority (FCA), all applicable regulatory filings and customary closing conditions, Zodia is expected to begin operations in London in 2021.
Alex Manson of SC Ventures said: “Zodia’s mission is to be a ‘force for good’ by lifting industry standards for digital assets in a sustainable, safe and responsible way.”
Zodia 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 and the market.
At launch, pending regulatory approval, Zodia will provide custody services for the most-traded cryptocurrency assets – Bitcoin, Ethereum, followed by XRP, Litecoin, and Bitcoin Cash – which represent the majority of client demand and activity, accounting for approximately 80% of the total assets [equivalent to $395 billion] traded on the top cryptocurrency exchanges.
Pete Cherecwich, president of corporate and institutional services at Northern Trust, said, “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.”
Alongside its partnerships with blockchain service providers, Standard Chartered has invested in core technology provider Metaco and is collaborating with the Bank of Thailand and the Hong Kong Monetary Authority to explore distributed ledger interoperability for cross-border fund transfers.
Northern Trust has a record of focused investment in digital innovation, having launched the industry’s first deployment of blockchain technology for the private equity market in 2017.
Working with key clients and regulators, Northern Trust continued to develop and implement additional capabilities on its blockchain and collaborated with Broadridge to make the technology available to all market participants. In 2020, Northern Trust and BondEvalue partnered to complete the first trade of a fractionalized blockchain-based bond, working in cooperation with the Monetary Authority of Singapore.
Zodia Custody is in the process of registering with the FCA under UK Money Laundering Regulations and will apply standards that are equivalent to the custody of traditional securities.