Standard Chartered has taken a direct role in the crypto custody market after announcing its appointment as digital asset custodian for 21Shares, one of the world’s largest issuers of exchange-traded products based on digital assets.
The service will be provided from Luxembourg under the supervision of the local financial regulator, placing the asset manager within an institutional infrastructure that seeks to reduce operational risk through traditional banking controls, stricter audits, and a legal framework built for institutional clients that require traceable processes and clear accountability in the management of funds.
- •Standard Chartered will now custody 21Shares’ assets, shifting part of the control to a traditional bank operating under real European supervision.
- •The service is based in Luxembourg and offers custody with auditing, banking controls, and a legal framework designed for institutional clients.
- •The decision casts doubt on the future of Zodia Custody and shows that major banks are taking space once occupied by crypto-native custodians.
Standard Chartered's Strategic Shift and Potential Impact on Zodia Custody
The agreement marks a major shift in the bank’s strategy. In 2020, Standard Chartered helped launch Zodia Custody to enter the crypto sector without holding digital assets directly. However, in June 2024, 21Shares had already selected Zodia as its main custodian, which now raises the question of whether the bank will replace that subsidiary or whether both will operate side by side in the same segment.
All three organizations declined to comment, and the lack of clarity fuels speculation about an internal restructuring of the custody business tied to growing institutional demand, which continues to rise as regulated products gain ground in financial markets.
Crypto Principles Under Tension Amidst Institutional Influx
Large banks are entering the crypto market and taking market share from crypto-native custodians that now face competition with stronger regulatory muscle, tighter margins, and less negotiating power compared to funds and corporations that already work with traditional financial providers.
In recent months, firms like US Bancorp, Citigroup, and Deutsche Bank have resumed or expanded their custody, payment, or digital asset storage services, taking advantage of regulatory maturation in markets such as Europe and the United States, which reduces the reputational risk that once limited their participation.
This shift is also generating cultural friction within the ecosystem. Industry voices argue that the migration of large holdings to ETF-linked services or consolidated banks dilutes Bitcoin’s original premise, envisioned as a network designed to operate without institutional intermediaries. However, the largest flows appear to prioritize operational convenience, legal compliance, and a custody structure already integrated into the broader banking relationships that managers use in the rest of their portfolios.
The information presented in this article is for informational purposes only and should not be interpreted as investment advice. The cryptocurrency market is highly volatile and may involve significant risks. We recommend conducting your own analysis.