21Shares taps Standard Chartered for custody as TradFi tightens grip on crypto

The financial landscape is witnessing a significant shift as traditional financial institutions increasingly venture into the world of cryptocurrencies. In a recent development, Standard Chartered has been chosen by 21Shares to provide digital asset custody services. This move highlights the growing integration of traditional finance into the crypto ecosystem and raises questions about the future of crypto-native custody solutions.

Traditional finance expands into crypto with custody services

Standard Chartered's announcement comes at a time when more traditional financial players are venturing into crypto services. The bank will offer its custody services from a newly established facility in Luxembourg, signaling its commitment to engaging with digital assets. This partnership follows Standard Chartered's earlier launch of a trading service aimed at institutional clients, allowing them to trade significant cryptocurrencies.

21Shares partners with Standard Chartered for digital asset custody

21Shares, a fund manager known for its exchange-traded crypto products, has opted for Standard Chartered as its digital asset custodian. This decision marks a potential departure from their previous partnership with Zodia Custody, a crypto-native custodian co-founded by Standard Chartered itself in 2020. This shift may indicate a preference for the reputation and stability that a traditional bank can provide in the rapidly evolving digital asset market.

Impact on crypto-native custodians raises industry concerns

While the collaboration between 21Shares and Standard Chartered is positioned as a strategic advantage, it raises questions about the future role of Zodia Custody. The lack of clarity surrounding whether Standard Chartered will fully replace Zodia or if both will coexist has sparked discussions within the industry. The trend of traditional banks entering the crypto space poses challenges for crypto-native custodians, who may find themselves competing against institutions with established reputations and resources.

Broader trends show traditional banks entering crypto custody space

The movement of traditional financial institutions into crypto custody is not isolated. Other major banks are also making similar strides. For instance, US Bancorp has recently reentered the crypto market with a renewed focus on digital asset custody services tailored for investment managers. Additionally, Citigroup and Deutsche Bank are exploring plans to offer cryptocurrency custody, reflecting a broader trend among financial giants to embrace digital assets. This increasing presence of traditional finance in the crypto sector could reshape the landscape, impacting both the services offered and the competitive dynamics between traditional and crypto-native institutions.

The evolution of crypto custody services will be closely watched as traditional finance continues to adapt to the digital asset space. As these developments unfold, they may significantly influence market dynamics and the strategies of builders and investors alike.