Standard Chartered’s Zodia Custody Gets FCA Approval to Offer Cryptocurrency Services
Zodia Custody has announced that it has obtained approval from the UK regulator (Financial Conduct Authority – FCA).
SC Ventures, the innovation and ventures unit of Standard Chartered and Northern Trust Corporation, launched Zodia Custody in 2020 in response to the rising number of institutions making their entry into the digital asset market.
Based on the development regarding the FCA’s approval, Alex Manson of SC Venters stated: “We believe crypto assets as an asset class is here to stay. We set up Zodia Custody with the clear goal of serving institutional investors who want to invest in cryptoassets in a sustainable, safe and responsible way. Our aspiration is to lift standards, grow the ecosystem and help a nascent industry mature, becoming more acceptable to institutional investors and ultimately society at large.”
Zodia Custody has obtained approval from the FCA under UK money laundering regulations. It will now apply standards equivalent to those already used for the custody of traditional securities in running its cryptocurrency business.
With its aim to serve the institutional market, Zodia Custody will offer custody services for the most-traded cryptocurrencies, including Bitcoin, Ethereum, followed by XRP, Litecoin, and Bitcoin Cash, which represent 80% of the total assets traded on the largest crypto exchanges at approximately $395 billion. Zodia is therefore well set to offer services to cryptocurrency businesses.
Crackdown on Cryptocurrency
Zodia’s entry into the digital asset market is likely to be a game-changer for the institutional adoption of crypto assets.
However, it has not been easy to get an FCA registration. So far, only nine firms have obtained a cryptocurrency registration. The main requirement is the enforcement of anti-money laundering and the prevention of terrorism financing. In January 2020, the FCA enabled a temporary registration, with about 75 firms currently holding such a designation, including the likes of Revolut, which processes significant volumes.
The first authorisation by FCA went to Archax, the tokenised securities firm, in August 2020. The only registration approval awarded to crypto businesses in 2020 included Ziglu crypto investment firm and crypto trading firm Gemini Europe. Since September 2020, there was no registration approval until this year in June when custody firm DigiVault, Ramp Swaps, Fibermode, and Solidi got approval.
In June this year, over 60 crypto-related firms, including Binance, withdrew their applications with the Financial Conduct Authority to do business in the UK. The nation tightened its regulation in space.
In late June, the regulator banned Binance from conducting its regulated activities in the country due to a lack of proper money laundering and terrorism financing prevention capabilities. The FCA joined other regulators across the globe, moving to prohibit or heavily control the crypto exchange amid a series of global regulations aiming to tighten regulations around crypto use. The ban also reflects concerns that Binance exchange is being used by criminals to launder the proceeds of attacks.
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