Banking Capital markets News

Standard Chartered’s Zodia Custody gets regulator approval

standard chartered bank

Zodia Custody, the digital asset custody firm, has received approval from the UK regulator, the Financial Conduct Authority (FCA).  Standard Chartered’s SC Ventures subsidiary founded the company last year and partnered with Northern Trust. Hence the company is now in production, providing services to crypto-asset businesses.

“We believe crypto-assets as an asset class is here to stay,” said Alex Manson of SC Ventures. “We set up Zodia Custody with the clear goal of serving institutional investors who want to invest in crypto-assets 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.”

It’s no mean feat to get an FCA registration. Only nine firms have received a crypto-asset registration to date. The primary requirement is the enforcement of anti-money laundering and preventing terrorism financing. In January 2020, the FCA enabled a temporary registration, with around 75 firms currently holding that designation including the likes of Revolut which process significant volumes.

The first FCA authorization went to Archax, the tokenized securities firm, in August 2020. The only other 2020 registrations when to crypto trading firm Gemini Europe, Gemini Europe Services and crypto investment firm Ziglu. There was then a lull from September 2020 until June this year. Since then, it approved custody firm DigiVault, Fibermode, Ramp Swaps and Solidi.

“The FCA registration, alongside the successful operational testing with pilot clients, marks a significant milestone,” said Pete Cherecwich, President, Corporate & Institutional Services, Northern Trust. “We are pleased that Zodia’s robust capabilities now make it possible to support the growing number of institutional asset owners, family offices and asset managers around the world investing in this emerging asset class.”

The custody firm is owned by Zodia Holdings, which received an initial $5 million injection from Standard Chartered last year. In April/May this year, another $15 million in funding was added, including one tranche of $2 million representing 10%. 

Meanwhile, Northern Trust has significant blockchain experience, having developed a private equity solution in 2017. Broadridge now manages that offering. It also provides custody services to BondEvalue in Singapore.