Standard Chartered’s crypto custodian Zodia expands operations to Singapore

Author: Ryan Browne, CNBC; Compiler: Songxue, Golden Finance

• Standard Chartered Bank unit Zodia Custody revealed it is expanding its operations in Singapore for the first time.
• The development makes Zodia the first entity owned by and partnered with a bank to provide cryptocurrency custody services to financial institutions in Singapore, the company said.
• Zodia CEO Julian Sawyer said Singapore is "moving towards greater maturity" when it comes to cryptocurrency regulation and the development of central bank digital currencies.

Zodia Custody, a company that helps large institutions store cryptocurrencies, launched in Singapore on Tuesday as it aims to tap into the country's fast-growing digital asset market.

This development makes Zodia the first bank-owned entity to partner with banks to provide digital asset custody services to financial institutions in Singapore, Zodia said in a press release.

Zodia is a subsidiary of UK-based Standard Chartered Bank, which operates in emerging markets across Asia, Africa and the Middle East. Standard Chartered launched Zodia with Northern Trust in 2021, a move that highlighted the curiosity of large institutions to interact with digital currencies. Zodia is also partly owned by SBI Digital Asset Holdings, the crypto arm of Japanese bank SBI. As part of the deal, SBI also agreed to develop custody operations in Japan.

Zodia said it hopes to expand across the Asia-Pacific region to meet growing institutional demand for bank-grade digital asset custody, as well as demand from existing clients in the region.

Zodia CEO Julian Sawyer noted that Singapore is “moving towards greater maturity” in setting rules for crypto assets and developing a central bank digital currency. Sawyer was previously a co-founder of Starling Bank.

“Singapore is a market that has long been no stranger to the crypto world,” Sawyer said. "We want to be a part of that. We think the market for bank custody is actually what the market needs."

Zodia works with clients ranging from hedge funds and high-frequency traders to prime brokers, exchanges and asset managers.

Sawyer said Standard Chartered has a "great brand" in Singapore, adding that the backing of such a large institution helps facilitate its conversations with major financial firms. “Being part of Standard Chartered came up in every conversation,” he said. "It's absolutely critical."

“We adopt their risk, compliance framework, information security, resilience and people management,” he added.

Singapore has seen rapid growth in digital asset adoption. According to market research firm Statista, the city-state’s cryptocurrency ownership rate is 19%, which is higher than the global average of 15%.

Despite the bear market the industry has endured following the bankruptcies of FTX, Three Arrows Capital, Terra and various other previously high-profile companies, funding for Singapore-based crypto companies has remained strong.

KPMG's FinTech Pulse Report for the second half of 2022 shows that cryptocurrency or blockchain is the top area of fintech investment in Singapore in 2022, attracting US$1.2 billion in funding in 2022. Still, cryptocurrency-related funding fell 21%. Globally, crypto startups raised $23.1 billion in 2022, down 23% year-on-year.

Zodia’s expansion into Singapore follows its expansion into Abu Dhabi. The company received in-principle regulatory approval in Abu Dhabi earlier this month to capitalize on the United Arab Emirates capital’s crypto-friendly regulatory environment and status as a financial hub.