Major bank Standard Chartered has announced that it has been selected by fund manager 21Shares as a digital asset custodian, potentially moving away from a crypto-native partner.
According to an announcement by Standard Chartered on Monday and shared with Cointelegraph, the bank will provide cryptocurrency custody services to 21Shares, which offers multiple exchange-traded crypto products. Margaret Harwood-Jones, the bank’s global head of finance and securities services, said the collaboration allows them to “extend our expertise into the rapidly evolving digital asset ecosystem”.
However, 21Shares already had a crypto-native custodian partner. At the end of June 2024, the fund manager joined together with crypto-native custodian Zodia Custody to hold your assets. Zodia Custody was co-founder by Standard Chartered in 2020 and acted as a fully owned branch, indicating that the bank wanted to avoid direct involvement in crypto at the time.
It is not clear whether Standard Chartered will take over the role of Zodia Custody or whether the two organizations will operate side by side. It remains unclear whether Standard Chartered will replace Zodia Custody or operate alongside it. The move comes at a time when more traditional financial institutions are introducing crypto services, often with reputational advantages over crypto-sourced competitors.
Standard Chartered, 21Shares and Zodia Custody did not respond to Cointelegraph’s request for comment on the announcement.
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Traditional finance is being taken over by crypto
Standard Chartered said 21Shares will work with its newly established digital asset custody service based in Luxembourg. The announcement follows the bank’s mid-July launch of a trading service that allows institutions and corporations to trade major cryptocurrencies.
21Shares’ global head of product development, Mandy Chiu, said the collaboration “is an important milestone in our continued mission to bring institutional-grade infrastructure to the digital asset ecosystem.” She highlighted the bank’s reputation in traditional finance as an advantage.
“As one of the world’s most trusted financial institutions, Standard Chartered brings deep expertise in cross-border banking, risk management and custody.”
Other major banks have taken similar steps. In September, US multinational financial services company US Bancorp re-entered the crypto space with the relaunch of its digital asset custody services aimed exclusively at investment managers. This followed the launch of the company’s custodial service in 2021, which was subsequently shut down due to unfavorable regulations.
Reports from mid-August also indicated that Wall Street giant Citigroup was considering plans to offer cryptocurrency custody and payment services. In July, it was reported that Germany’s largest bank, Deutsche Bank, is also planning to allow its customers to store cryptocurrencies – amid a wider trend in the country.
Related: US federal agencies highlight key risks for banks considering custody of cryptocurrencies
Crypto and traditional finance are changing together
The trend has fueled debate within the industry as crypto-native institutions face intense competition.
In October, Martin Hiesboeck, head of blockchain and crypto research at crypto financial services platform Uphold, said that large Bitcoin (BTC) wallets moving their assets into ETFs were “another nail in the coffin of the original crypto spirit.”
The comment comes after Robbie Mitchnick, BlackRock’s head of digital assets, said the company has already enabled more than $3 billion worth of real Bitcoin to be converted into ETFs. He added that owners recognize “the convenience of being able to keep their exposure within their existing financial advisor or private bank relationship.”
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