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Standard Chartered's crypto subsidiary to offer yield on crypto holdings

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(Kitco News) - Institutional investors who bank under Standard Chartered’s umbrella will soon be able to earn a yield on their crypto holdings as Zodia Custody, the bank’s crypto unit, is set to begin allowing high net-worth clients to access to its “Zodia Custoy Yield” platform for the first time.

According to the announcement from Zodia Custody, the firm has partnered with OpenEden, a platform focused on bridging real-world assets into decentralized finance (DeFi) via tokenization, which will enable Zodia Custody clients to put their crypto assets to work earning a yield.

“Institutional investors will now be able to access ‘Zodia Custody Yield,’ allowing access to earnings potential via Open Eden’s service whilst assets are held safely in bank-grade digital asset custody,” the announcement said.

The new integration will also give institutions exposure to staking services, enabling them to “access off-chain yield potential for their on-chain assets without compromising on the bank-grade security of Zodia Custody’s platform.”

The firms said they decided to launch this collaboration in response to increasing demands for an “institutional-grade custody solution for digital asset products that [is] low-risk, liquid, and transparent with respect to how returns are generated for stablecoin holders.”

Through the partnership, Zodia Custoy will be able to “provide added assurance to investors seeking to custody assets in safe cold storage,” while at the same time offering institutions access “to the potential of real-world yield from U.S. Treasury bills enabled by OpenEden’s platform, which provides on-chain security and transparency on real-world assets managed by regulated fund managers,” they said.

“There’s a lot in the world of traditional finance that can be moved to digital assets,” said Julian Sawyer, CEO of Zodia Custody. “The challenge is how to bring some of the benefits to the world in a safe, compliant, and regulatory-first way. Our first such partnership with OpenEden is exactly how we do this – by bringing access to yield products to our clients.”

Zodia Custody was launched by Standard Chartered and Northern Trust in 2021. In April, the firm conducted a Series A funding round where they raised approximately $36 million from a variety of investors including SBI Holdings and Standard Chartered’s venture arm, SC Ventures. SBI Holdings is now the second largest shareholder in Zodia Custody after Standard Chartered.

“The future direction of the digital asset ecosystem is clear,” said Julian Sawyer, CEO of Zodia Custody following the funding round. “As investors demand greater assurance and rigor, compliance is crucial to the future evolution of our sector.”

Zodia Custody also has an institutional trading platform named Zodia Markets, which earlier in 2023 outlined plans to expand its operations in the U.S. in response to an increase in institutional demand for access to cryptocurrencies.

In June, OpenEden formed a partnership with Finblox to launch tokenized U.S. Treasury Bills, giving investors in Southeast Asia a way to earn a yield on their stablecoin holdings via OpenEden’s TBILL token rights.

According to OpenEden, the Tokenized T-bills (TBILL) Vault is the world’s first smart-contract vault for U.S. Treasuries. The Vault gives investors direct exposure to a pool of short-dated T-Bills through the Vault’s TBILL token, which is backed 1:1 by the T-Bills, USD Coin (USDC), and U.S. dollar reserves. The Vault allows TBILL holders to receive a return on their capital via the yields offered by the underlying T-Bill assets.

This new collaboration between Zodia Custody and OpenEden is intended to expand access to yield opportunities for institutional investors.

“There are billions of dollars worth of stablecoins sitting on the sidelines when they could easily be generating yields for investors,” said Jeremy Ng, co-founder of OpenEden. “That’s a huge opportunity and one that we and Zodia Custody hope to bring to institutions through our respective service platforms which will allow issuers and investors to enter the digital asset market through tokenized financial products, in a way that is both safe and transparent.”

Standard Chartered to offer crypto custody services in Dubai

The partnership with OpenEden, a leading Singapore-based digital asset platform developer, comes just days after Zodia Custody announced its new subsidiary in Singapore in response to strong client demand and accelerated global growth. The launch “makes Zodia Custody the first entity that is owned by, and partnered with, banks to provide digital asset custody services for financial institutions in Singapore,” they said.

Zodia Custody also recently announced that it has formed a long-term strategic partnership with Parity Technologies, a leading contributor to the Polkadot ecosystem. The partnership “will enable institutional access to the Polkadot ecosystem and in the longer term, broaden the Polkadot ecosystem’s institutional adoption via joint research and development initiatives,” they said.

The first phase of the partnership will see Zodia Custody provide custody services for the Polkadot ecosystem, “enabling secure market access and bank-grade digital asset custody services for financial institutions.”

In the second phase of the partnership, Zodia Custody plans to allow financial institutions to stake DOT, the native token of Polkadot, while their assets are being held in cold storage, “thereby broadening the reach of participation in the Polkadot ecosystem to institutions,” the firm said.

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