Standard Chartered's Zodia Custody Expands to Singapore, Brings Yield on Crypto For Institutional Clients

Zodia Custody, the crypto-focused subsidiary of Standard Chartered, is set to offer its clients the opportunity to earn yield on their cryptocurrency holdings. This initiative, known as "Zodia Custody Yield," is the result of a partnership with OpenEden, a platform that tokenizes real-world assets like treasury bills, enabling investors to earn yields while benefiting from blockchain technology.

The primary aim of this yield offering is to provide institutional investors with access to off-chain yield potential for their on-chain assets, all while maintaining the bank-grade security offered by Zodia Custody's platform. This includes a feature known as staking, where crypto owners lock up their digital assets to secure the blockchain while earning periodic crypto rewards.

However, it's worth noting that staking has faced regulatory challenges in the United States. Companies like Kraken and Coinbase have been sued by the Securities and Exchange Commission (SEC) for offering similar products to retail customers without providing the required risk disclosures.

Despite these regulatory hurdles in the U.S., European firms are embracing staking services for institutional clients. Boerse Stuttgart Group, a German exchange giant, recently announced its own staking service, citing increasing interest from institutional investors in this sector.

Zodia Custody's decision to offer yield opportunities is driven by the growing demand among institutions for low-risk, liquid, and transparent digital asset products. Stablecoins, which are blockchain-based tokens backed by fiat currencies like the U.S. dollar, have become popular for value transfer and loan collateral within the blockchain and DeFi ecosystems.

Jeremy Ng, co-founder of OpenEden, highlighted the vast potential of stablecoins, stating that there are billions of dollars' worth of stablecoins that could be generating yields for investors. This partnership between Zodia Custody and OpenEden aims to tap into this opportunity by providing tokenized financial products in a secure and transparent manner.

Julian Sawyer, CEO of Zodia Custody, emphasized that many aspects of traditional finance can be integrated into the digital asset space. This expansion comes shortly after Zodia Custody extended its crypto custody services to Singapore, becoming the first entity owned by and partnered with banks to provide digital asset custody services in the country.

Zodia Custody's move into Singapore aligns with the region's efforts to establish a well-defined digital asset ecosystem, including proposed legislation around the safeguarding of digital assets. This positions Zodia Custody well to meet institutional needs for risk management and governance controls in the region.

The partnership with OpenEden is part of Zodia Custody's global growth strategy, which includes expanding into Japan through a joint venture with SBI Digital Asset Holdings and into Luxembourg. The firm also recently completed a successful $36 million Series A fundraising round to support its expansion efforts.

In addition to its cryptocurrency custody services, Zodia Custody is exploring opportunities to offer yield to institutional clients, highlighting the growing convergence of traditional finance and the digital asset ecosystem. This move underscores the increasing interest from financial institutions in the crypto space and the evolving regulatory landscape that accompanies it.