Zodia Custody Offers Yield on Stablecoin Amid Race to Woo Institutional Investors

2 mins
Updated by Michael Washburn
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In Brief

  • Standard Chartered-owned Zodia Custody will offer staking for investors that park their stablecoin on its digital platform.
  • Zodia Custody Yield, using technology developed by OpenEden, is part of a growing trend on the part of crypto-savvy banks.
  • As the market awaits rulings on spot Bitcoin ETFs, banks look for creative ways to woo institutional investors with crypto services.
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As banks and their cryptocurrency divisions compete hard to curry favor with institutional investors, Standard Chartered-owned Zodia Custody has announced a staking option for crypto holdings stored on its platform.

The firm has rolled out “Zodia Custody Yield” in collaboration with DeFi platform OpenEden. The service offers returns on stablecoins and purports to adhere to high cybersecurity standards. Although the announcement is somewhat vague on the details of the latter.

Zodia Custody Woos Stablecoin Holders

When it comes to crypto, Standard Chartered has positioned itself as one of the most bullish financial institutions in the world. In June, the UK bank predicted that Bitcoin (BTC) could well hit $50,000 in 2023. And that it might hit $120,000 next year.

Standard Chartered and Northern Trust, an asset servicing firm, rolled out Zodia Custody in 2021. The new venture has enjoyed modest success. It raised $36 million from investors and partnered with SBI Digital Asset Holdings to expand into the Japanese market.

The latter choice is not a random one. Japan has emerged as one of the most fintech- and crypto-friendly jurisdictions. Notably with a new law that permits startups to issue cryptocurrency instead of stock. In June, new legislation vastly expanded the domain for stablecoin transactions, allowing banks and some companies to issue stablecoin.

In a statement accompanying the announcement, Jeremy Ng, co-founder of OpenEden, stressed what he saw as the potential of crypto to bring in significant passive income for its holders.

“There are billions of dollars worth of stablecoins sitting on the sidelines when they could easily be generating yields for investors,” Ng stated.

Banks are far from unanimous about whether to adopt digital assets, but Zodia Custody seeks to woo institutional investors with yield on stablecoin. Source: Statista

Taking After Other Financial Institutions

Zodia’s announcement is part of a gathering trend. It comes just a day after another leading US bank made its pitch to wealthy investors interested in blockchain.

Citi Treasury and Trade Solutions said it had partnered with Maersk to make services available that convert funds to digital assets. The idea is for customers of the bank to be able to send payments almost instantaneously. And without regard for business hours.

Meanwhile, a number of the most prominent asset managers await a ruling on their application to launch a spot Bitcoin ETF.

BlackRock, Invesco, WisdomTree, ARK Invest, Valkyrie, and Franklin Templeton all await decisions from the Securities and Exchange Commission (SEC). But clearly the trend-setter here was BlackRock, which filed for approval of its spot Bitcoin ETF on June 16.

Learn more about the newest entrant in the intensifying race for spot Bitcoin ETF approval.

Blockchain- and crypto-based products that some once considered fringe now figure prominently in the financial strategies of all these players. But even though many see approval of BlackRock’s ETF as a fait accompli, the firm’s efforts to obtain approval for, and market, its ETF face considerable hurdles.

BlackRock has been the target of hostile scrutiny from US regulators who have concerns about its links to China. Not to mention from politicians who fault the asset manager for placing ESG criteria over returns for investors.

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Michael Washburn
Michael Washburn is a New York-based managing editor who joined BeInCrypto in March 2023. Over his career, he written extensively about the corporate legal world and the intersection of finance and law, has produced thousands of articles and features, and has mentored many reporters and researchers finding their way in a fast-changing industry.