Standard Chartered Bank announced that the fund management company 21Shares has chosen it as its digital asset custodian, potentially abandoning its crypto-native partner.
According to an announcement shared by Standard Chartered with Cointelegraph on Monday, the bank will provide crypto custody services for 21Shares, which offers a variety of exchange-traded crypto products. Margaret Harwood-Jones, the bank's global head of financing and securities services, stated that this collaboration allows them to "extend our expertise into the rapidly evolving digital asset ecosystem."
However, 21Shares already has a crypto-native custody partner. By the end of June 2024, the fund management company will hold its assets in partnership with Zodia Custody, a crypto-native custodian co-founded by Standard Chartered in 2020 and operating as a wholly-owned subsidiary, indicating that the bank aimed to avoid direct involvement in the crypto business at that time.
It remains unclear whether Standard Chartered will take over Zodia Custody's role or if the two institutions will operate concurrently. As more traditional financial institutions launch crypto services, they often have a reputational advantage over their crypto-native competitors.
As of the time of publication, Standard Chartered, 21Shares, and Zodia Custody had not responded to Cointelegraph's request for comment.
Standard Chartered stated that 21Shares will collaborate with its newly established digital asset custody service based in Luxembourg. This announcement follows the bank's launch of trading services in mid-July, which allows institutions and corporations to trade major cryptocurrencies.
Mandy Chiu, the global head of product development at 21Shares, remarked that this collaboration is "an important milestone in our ongoing commitment to bringing institutional-grade infrastructure to the digital asset ecosystem." She noted that the bank's reputation in traditional finance is an advantage.
Other large banks have also taken similar measures. In September, U.S. Bancorp, a multinational financial services company, re-entered the crypto space by relaunching a digital asset custody service explicitly targeting investment management companies. The company had previously launched custody services in 2021 but shut them down due to an unfavorable regulatory environment.
Reports in mid-August also indicated that Wall Street giant Citigroup is weighing plans to offer cryptocurrency custody and payment services. In July, it was reported that Deutsche Bank, Germany's largest bank, also plans to allow its clients to store cryptocurrencies, part of a broader trend in the country.
This trend has sparked debate within the industry, as crypto-native institutions face intense competition.
In October, Martin Hiesboeck, head of blockchain and crypto research at the crypto financial services platform Uphold, stated that large Bitcoin (BTC) wallets transferring their assets into ETFs is "another nail in the coffin of the original crypto spirit."
This comment came after Robbie Mitchnick, head of digital assets at BlackRock, stated that the company has facilitated the conversion of over $3 billion of real Bitcoin into ETFs. He added that holders recognize "the convenience of being able to hold their exposure within existing financial advisor or private banking relationships."
Related: Polymarket receives CFTC regulatory approval to operate intermediary trading platform in the U.S.
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