Standard Chartered’s Zodia launches crypto custody in Hong Kong

The expansion, revealed exclusively to CNBC, marks a crucial step in the U.K.-based firm’s growing footprint across the Asia-Pacific region.

Since its inception in 2020, Zodia Custody has been helping financial institutions in the secure storage and management of their cryptocurrency assets. Julian Sawyer, CEO of Zodia, explained the strategic choice of Hong Kong, noting that the demand for crypto in this market is institution-driven—a perfect match for Zodia’s client profile.

“The Hong Kong government and regulators are embracing digital assets and envision Hong Kong as a pivotal hub in this landscape,” Sawyer remarked, aligning with Zodia’s vision and services.

Zodia Custody, co-owned by Standard Chartered, SBI Holdings of Japan, and Northern Trust, has been on a rapid expansion trajectory in Asia. The firm has recently launched its services in Japan, Singapore, and Australia, with Hong Kong being the latest addition to this list.

Sawyer shed light on the broader client interest from within the four markets and beyond, particularly from institutional players looking to dive into the crypto domain. Zodia’s phased expansion approach in Hong Kong initially focuses on offering a limited set of crypto assets to its local clientele.

The decision to venture into Hong Kong aligns with the region’s evolving stance on crypto assets. Despite China’s stringent anti-crypto measures, including a ban on bitcoin trading and mining in 2021, Hong Kong has been open toward digital assets. Earlier this year, the Hong Kong Securities and Futures Commission (SFC) initiated a regulatory framework for digital assets, allowing companies to apply for registration and operate in a regulated environment.

Currently, only two firms, OSL Digital and Hash Blockchain, have secured licenses from the SFC. Zodia, as part of its Hong Kong strategy, is actively engaging with the SFC and the Hong Kong Monetary Authority to navigate the regulatory landscape and expand its services in the financial hub.

Earlier this month, SC’s crypto brokerage arm Zodia Markets secured registration as a Virtual Asset Service Provider (VASP) from Ireland’s central bank, marking a foothold in the EU’s crypto landscape.

The company had previously received similar permissions in the United Kingdom last year and in Abu Dhabi just last month. With the recent registration in Ireland, Zodia Markets now possesses a licensed entity within the European Union as the bloc gears up for the full-fledged roll-out of its Markets in Cryptoassets Regulation (MiCA). Once MiCA takes effect by the end of 2024, entities licensed in any member state will, in essence, find it more seamless to operate across the entire bloc.