Standard Chartered is taking purposeful strides in the cryptocurrency sector. The London-based banking giant has unveiled plans to launch Bitcoin and ether custody services in Dubai by the first quarter of 2024. Moreover, the bank is in the final stages of acquiring In-Principle Approval to act as a cryptocurrency broker-dealer in Abu Dhabi’s over-the-counter market.
Earlier this year, Standard Chartered and DIFC entered a memorandum of understanding (MoU) to work together on digital asset custody services.
However, Waqar Chaudry, the bank’s executive director of innovation, spotlighted the global reach of Dubai International Financial Centre (DIFC). According to him, DIFC’s robust regulatory framework allows the bank to extend its digital asset services to various jurisdictions. Consequently, Standard Chartered aims to go beyond local offerings as it gains regulatory approvals in different countries.
He also commented: “We have existing rails and settlement capability as well as service provision with other traditional custodians; we can service them, we can use them, they can use us. So that network effect will take hold pretty quickly after entities like us enter the market, rather than depending on a single bank network, unlike what recently failed institutions had built for the crypto market.”
Zodia Custody takes the lead
The new custodial services will operate under Zodia Custody, a venture-backed by Standard Chartered Ventures. Notably, Zodia Custody already possesses a respectable track record. It has secured approvals from UK, Ireland, and Luxembourg regulators. Recently, the firm also drew in a $36 million investment led by SBI Holdings.
Regarding regulation, the United Arab Emirates (UAE) provides a favorable environment for financial institutions dealing with digital assets. Bill Winters, the CEO of Standard Chartered, commended the balanced regulatory approach of the UAE. Additionally, the bank has existing operational frameworks with traditional custodians, a detail that is expected to expedite the network effect once Standard Chartered enters the digital asset market.
Dubai is not a newfound territory for Standard Chartered. Since establishing its first branch in Sharjah in 1958, the bank has incrementally increased its presence in the region. Dubai now serves as the bank’s regional hub for Africa and the Middle East. Additionally, it is the base for Standard Chartered’s Islamic Banking arm, Standard Chartered Saadiq.
Zodia Markets’ foray into the UAE is particularly interesting. Driven by the country’s growing stature in the digital asset industry, this move aims to facilitate the involvement of institutional investors from the Middle East and Africa.
Waqar Chaudry stated: “Back in 2018, when places like Singapore and the UAE were busy consulting on crypto assets, some other regions had not even made the distinction between a security and non-security status when it came to crypto assets. For that reason, now we see the difference in maturity in markets where countries like the UAE, Japan, Singapore, and Hong Kong are beginning to move faster.”
Undoubtedly, Standard Chartered’s calculated entry into the digital asset custody space marks another significant chapter. In contrast to the regulatory challenges faced by crypto companies in the United States, the UAE seems to offer a more conducive environment. Hence, this venture could serve as a pivotal moment not just for Standard Chartered but also for the adaptation and regulation of digital assets in the global financial ecosystem.
Source: https://www.cryptopolitan.com/standard-chartered-sets-sights-on-crypto-custody-services-in-dubai/