Standard Chartered and Northern Trust Partner to Launch Zodia, a Cryptocurrency Custodian for Institutional Investors

Rhea-AI Summary

SC Ventures, part of Standard Chartered, and Northern Trust have announced a partnership to launch Zodia Custody, an institutional-grade custody solution for cryptocurrencies. With cryptocurrencies currently at 0.3% of global currency and expected to grow at a CAGR of 32% until 2024, Zodia aims to cater to institutional interest, currently low at 9%. Pending regulatory approval, Zodia will initially provide custody for major cryptocurrencies, which account for 80% of top crypto assets. The service aims to combine traditional banking security with fintech agility.

Positive

• Collaboration between SC Ventures and Northern Trust to launch Zodia Custody enhances institutional cryptocurrency investment infrastructure.
• Zodia Custody targets a growing market with cryptocurrencies projected to grow at a CAGR of 32% from 2019 to 2024.
• Service set to provide custody for major cryptocurrencies, representing 80% of total trading activity.

Negative

• Current institutional investment in cryptocurrencies is low at 9%, posing a challenge for Zodia Custody's initial client acquisition.

LONDON--(BUSINESS WIRE)--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.

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. 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.

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 USD395B] traded on the top cryptocurrency exchanges.

Maxime De Guillebon, Chief Executive Officer of Zodia, said: “Zodia was established to address the need for a cryptocurrency custodian that truly understands custody. We combine the risk management, compliance, governance and security approach of a regulated financial institution with the cutting-edge innovation of crypto asset and key management technologies. By doing so, we enable operational efficiency and speed of transaction without compromising on security or reliability.”

Alex Manson of SC Ventures, said: “The launch of Zodia demonstrates our commitment to rewiring the DNA in banking. Drawing on Standard Chartered’s heritage of providing custody services to institutional clients for 160 years, Zodia’s mission is to be a ‘force for good’ by lifting industry standards for digital assets in a sustainable, safe and responsible way.”

Pete Cherecwich, President, Corporate & Institutional Services, Northern Trust, said, “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. 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.”

Zodia further establishes Standard Chartered and Northern Trust as leaders in the development of digital-asset infrastructure. 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.

Note to Editors

Standard Chartered

We are a leading international banking group, with a presence in 60 of the world’s most dynamic markets and serving clients in a further 85. Our purpose is to drive commerce and prosperity through our unique diversity, and our heritage and values are expressed in our brand promise, Here for good.

Standard Chartered PLC is listed on the London and Hong Kong Stock Exchanges.

For more stories and expert opinions please visit Insights at sc.com. Follow Standard Chartered on Twitter, LinkedIn and Facebook.

Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 22 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of September 30, 2020, Northern Trust had assets under custody/administration of US $13.1 trillion, and assets under management of US $1.3 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Please visit our website or follow us on Twitter.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Please read our global and regulatory information.

---

¹Source: Research and Markets’ Cryptocurrency Market Report, April 2020