Capital markets News

StanChart’s digital asset firm Zodia Custody raises $36m led by SBI

Standard Chartered Bank

Zodia Custody announced a $36 million round of funding led by Japan’s SBI Holdings. This brings the total funds raised to $68 million. UK-based Zodia Custody was founded as a digital asset joint venture between Standard Chartered and Northern Trust, which had a 5% interest in the venture before today. The target market is institutional investors.

SBI said that with the investment, “we believe that we can further promote and expand the global corridor strategy of digital assets, which is our business strategy.” The deal is potentially significant for Zodia. For example, SBI has a joint venture in Singapore with Switzerland’s SIX for AsiaNext, a digital asset trading venue that does not provide custody.

In February, SBI Digital Asset Holdings formed a joint venture with Zodia to create a Japanese institutional custodian, with SBI owning 51%.

It follows a collaboration deal last year between SBI and SC Ventures to expand their investment portfolios and geographic footprint. SBI reiterated the commitment saying it’s looking at South Asia, the Middle East and Africa.

According to Bloomberg, Zodia Custody will partly use funds for geographic expansion beyond Europe and Japan, with an interest in the Middle East but not the United States, because of regulatory uncertainty. That’s likely not just the securities issue but also the SEC requirement to put digital assets under custody on the balance sheet.

The split of the $36 million Zodia Custody funding has not been disclosed, but in late March, Standard Chartered’s Zodia Holdings issued an additional $5 million in capital, according to corporate filings. If that represents the split, then StanChart currently owns around 51 or 52% of Zodia Custody. (Update: Following a corporate filing we believe StanChart holds 69%)*.

Standard Chartered has a separate digital asset trading venture, Zodia Markets, with Hong Kong OSL as the minority partner.

Both SBI and Standard Chartered are prolific blockchain and digital asset investors. Some of Standard Chartered’s recent initiatives include joining SWIAT, the DLT tokenization network founded by DekaBank. Late last year, it invested in Partior, the Singapore-based interbank payments network founded by JP Morgan, DBS Bank and Temasek.

Update: a corporate filing indicates the shareholding split is roughly StanChart 69.5% (73% votes), SBI 20%, Northern Trust 8%, Zodia Investments 2.5%.

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