Standard Chartered to Custody 21Shares’ Digital Assets

Standard Chartered’s announcement that it will provide digital asset custody services to 21Shares represents a significant milestone in traditional finance’s embrace of cryptocurrency. The London-based banking giant confirmed on Monday that it will serve as custodian for 21Shares, which manages multiple exchange-traded crypto products. Margaret Harwood-Jones, Standard Chartered’s global head of financing and securities services, emphasized that the collaboration allows the bank to “extend our expertise into the fast-evolving digital asset ecosystem.”

This direct involvement marks a strategic shift for Standard Chartered, which had previously maintained an arms-length approach to cryptocurrency through its subsidiary Zodia Custody. The bank’s decision to now offer custody services directly to a major crypto fund manager signals growing confidence in the institutional digital asset space and reflects the maturation of crypto infrastructure within traditional banking frameworks.

The Standard Chartered-21Shares partnership raises immediate questions about the future positioning of Zodia Custody, the crypto-native custodian that 21Shares had partnered with just months earlier in June 2024. Zodia Custody was co-founded by Standard Chartered in 2020 and operated as a wholly owned subsidiary, representing the bank’s initial strategy of maintaining separation between its core banking operations and cryptocurrency exposure.

The timing of this new arrangement is particularly noteworthy given that 21Shares had established its custody relationship with Zodia Custody less than two months before Standard Chartered’s announcement. This rapid transition from using the bank’s crypto-native subsidiary to engaging the parent bank directly suggests a reevaluation of Standard Chartered’s custody strategy and potentially indicates a diminished role for Zodia Custody within the bank’s broader digital asset ecosystem.

Standard Chartered’s move to provide direct custody services to 21Shares reflects the accelerating convergence between traditional finance and cryptocurrency markets. By bringing custody services in-house rather than continuing to route them through its specialized subsidiary, the bank demonstrates increased comfort with digital asset management and signals to other traditional financial institutions that direct crypto involvement is becoming mainstream.

The decision also highlights the competitive dynamics within the crypto custody space, where traditional banks are increasingly competing directly with crypto-native providers. Margaret Harwood-Jones’s statement about extending the bank’s expertise suggests that Standard Chartered views its traditional financial services experience as a competitive advantage in the digital asset custody market, potentially positioning the bank to capture more institutional crypto business as regulatory frameworks mature.

This development represents a notable evolution from Standard Chartered’s initial cautious approach through Zodia Custody to its current direct involvement, mirroring the broader trajectory of institutional adoption in cryptocurrency markets. As more traditional financial institutions follow similar paths, the distinction between traditional finance and cryptocurrency services continues to blur, potentially accelerating mainstream adoption of digital assets.