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Standard Chartered’s Zodia Custody Gets FCA Approval to Offer Cryptocurrency Services

Zodia Custody has announced that it has obtained approval from the UK regulator (Financial Conduct Authority – FCA).

SC Ventures, the innovation and ventures unit of Standard Chartered and Northern Trust Corporation, launched Zodia Custody in 2020 in response to the rising number of institutions making their entry into the digital asset market.

Based on the development regarding the FCA’s approval, Alex Manson of SC Venters stated: “We believe crypto assets as an asset class is here to stay. We set up Zodia Custody with the clear goal of serving institutional investors who want to invest in cryptoassets in a sustainable, safe and responsible way. Our aspiration is to lift standards, grow the ecosystem and help a nascent industry mature, becoming more acceptable to institutional investors and ultimately society at large.”

Zodia Custody has obtained approval from the FCA under UK money laundering regulations. It will now apply standards equivalent to those already used for the custody of traditional securities in running its cryptocurrency business.

With its aim to serve the institutional market, Zodia Custody will offer custody services for the most-traded cryptocurrencies, including Bitcoin, Ethereum, followed by XRP, Litecoin, and Bitcoin Cash, which represent 80% of the total assets traded on the largest crypto exchanges at approximately $395 billion. Zodia is therefore well set to offer services to cryptocurrency businesses.

Crackdown on Cryptocurrency

Zodia’s entry into the digital asset market is likely to be a game-changer for the institutional adoption of crypto assets.

However, it has not been easy to get an FCA registration. So far, only nine firms have obtained a cryptocurrency registration. The main requirement is the enforcement of anti-money laundering and the prevention of terrorism financing. In January 2020, the FCA enabled a temporary registration, with about 75 firms currently holding such a designation, including the likes of Revolut, which processes significant volumes.

The first authorisation by FCA went to Archax, the tokenised securities firm, in August 2020. The only registration approval awarded to crypto businesses in 2020 included Ziglu crypto investment firm and crypto trading firm Gemini Europe. Since September 2020, there was no registration approval until this year in June when custody firm DigiVault, Ramp Swaps, Fibermode, and Solidi got approval.

In June this year, over 60 crypto-related firms, including Binance, withdrew their applications with the Financial Conduct Authority to do business in the UK. The nation tightened its regulation in space.

In late June, the regulator banned Binance from conducting its regulated activities in the country due to a lack of proper money laundering and terrorism financing prevention capabilities. The FCA joined other regulators across the globe, moving to prohibit or heavily control the crypto exchange amid a series of global regulations aiming to tighten regulations around crypto use. The ban also reflects concerns that Binance exchange is being used by criminals to launder the proceeds of attacks.

Standard Chartered raises $36m for crypto custody platform

Standard Chartered has raised $36 million in a new series A funding round for its cryptocurrency custody subsidiary, Zodia Custody. The funding round was led by Japanese financial conglomerate SBI Holdings, which reportedly became the second-largest shareholder in Zodia Custody. Prior to this funding round, Zodia was backed exclusively by Standard Chartered and Northern Trust, with Standard Chartered holding a 90% stake in the firm. However, it remains the majority shareholder even after the latest fundraise, according to Zodia Custody CEO Julian Sawyer.

Zodia Custody was launched in December 2020 as a joint venture between Standard Chartered and Northern Trust, with a focus on providing custody services for digital assets. The platform is designed to provide institutional investors with a secure and compliant way to store their cryptocurrencies. With the new funding, Zodia plans to expand its offering and develop new products and services for its clients.

Standard Chartered’s move to raise funding for its crypto custody platform is part of a larger trend of global banks expanding their capabilities in the cryptocurrency space. As more institutional investors look to gain exposure to cryptocurrencies, banks are stepping up to provide the infrastructure and services needed to support this demand. In addition to Standard Chartered, other major banks such as JPMorgan, Goldman Sachs, and Bank of New York Mellon have all recently announced plans to offer cryptocurrency-related services to their clients.

The involvement of SBI Holdings in the latest funding round is notable, as the Japanese conglomerate has been a major player in the cryptocurrency space for several years. SBI Holdings operates a number of cryptocurrency-related businesses, including a crypto exchange and a mining subsidiary. The firm has also invested in several blockchain startups and is known for its bullish stance on cryptocurrencies.

In summary, Standard Chartered has raised $36 million in a funding round for its cryptocurrency custody subsidiary, Zodia Custody, with SBI Holdings leading the round. The move reflects a larger trend of global banks expanding their cryptocurrency-related capabilities to meet growing demand from institutional investors. With the new funding, Zodia plans to expand its offering and develop new products and services for its clients.

Zodia Custody and Parity Technologies Forge Strategic Partnership for Polkadot Ecosystem

Zodia Custody, a leading digital asset custodian backed by shareholders such as Standard Chartered, SBI Holdings, and Northern Trust, has announced a strategic alliance with Parity Technologies, a software development company passionate about building an inclusive internet. Parity, with offices in Berlin, London, Lisbon, and Singapore, successfully launched Polkadot in 2021 and remains a primary contributor to the network.

This collaboration aims to bolster institutional access to the Polkadot ecosystem, a pioneering blockspace ecosystem that fosters innovation and facilitates Web3’s top innovators to swiftly bring their ideas to fruition. The partnership will be realized through joint research and development initiatives.

Enhancing Institutional Access and Compliance

The primary outcome of this partnership will be Zodia Custody’s provision of custody services for the Polkadot ecosystem. This move will ensure secure market access and offer bank-grade digital asset custody services to financial institutions. Zodia Custody, empowering institutional investors globally to harness the potential of the digital asset future securely, upholds stringent standards related to AML, FCC, and KYC. It is registered with regulatory bodies in the UK, Ireland, and Luxembourg.

Broadening Participation through Staking

The subsequent phase of this collaboration will facilitate financial institutions in staking DOT, Polkadot’s native token. This will occur while assets remain securely stored in Zodia Custody’s cold storage, expanding institutional participation in the Polkadot ecosystem. The service is crafted to be seamless, promoting a wider contribution to fortify the decentralized Polkadot network.

Bridging the Gap between Traditional Finance and Digital Assets

Julian Sawyer, CEO of Zodia Custody, remarked, “The gap between the world of digital assets and traditional finance is coming together, but strategic partnerships such as this one will help bridge that gap at scale.” He emphasized the importance of the partnership with Parity in fostering future institutional participation and making Polkadot’s technology more institution-friendly.

Echoing this sentiment, Björn Wagner, CEO of Parity Technologies, stated, “This collaboration with Zodia Custody is a win-win.” He highlighted the potential for financial institutions to actively engage in the Web3 future on Polkadot and the opportunity for the Polkadot ecosystem to directly interact with these institutions.

Long-Term Growth and Education

Beyond immediate implementations, Zodia Custody’s collaboration with Parity will support the Polkadot ecosystem’s sustained evolution. This includes enlightening institutions about Polkadot technology through collaborative research and development. Additionally, Zodia Custody will champion various global initiatives associated with Parity and Polkadot.

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