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(Kitco News) - Standard Chartered, the British multinational bank specializing in consumer, corporate and institutional banking, has announced that it plans to launch digital asset custody services in the Dubai International Financial Centre (DIFC) with a focus on servicing institutional investors, pending regulatory approval.
Ledger Insights was the first to report on the Memorandum of Understanding (MoU) signed between Standard Chartered and the DIFC, which outlines how the bank will utilize one of its subsidiaries, Zodia Custody, to offer the service in the Middle East and North Africa (MENA) region.
Zodia Custody recently conducted a Series A funding round where the institutional-grade crypto asset custodial platform 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 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.”
The MoU, which aligns with Dubai’s vision of being at the forefront of the future of finance, was signed by DIFC governor Essa Kazim and Standard Chartered group CEO Bill Winters at the recent Dubai Fintech Summit.
“We see digital assets as an important part of the future of financial services and we are committed to investing in the infrastructure and talent necessary to be a leader in this space,” said Winters. “The UAE has a well-balanced approach to digital asset adoption and financial regulation, making it an ideal first market for us to launch our digital asset custody proposition.”
Both parties have also expressed the goal of finding other partnership opportunities that support their visions and promote a thriving digital asset ecosystem which can bring benefits to Dubai and the broader economy of the United Arab Emirates.
According to Kazim, the Dubai fintech sector can accommodate innovation and has already established a fintech market that has emerged as a critical driver of innovation and economic growth. This aligns with the government’s Dubai Economic Agenda (D33), which is targeted at making the jurisdiction one of the top four financial hubs in the world.
“DIFC welcomes collaboration with partners such as Standard Chartered to further accelerate growth and enable collaboration that triggers new innovation as we continue to shape the future of finance together,” Kazim said.
The United Arab Emirates (UAE) has made significant advances in the past year in its efforts to become a blockchain and fintech hub for the MENA region.
In April, the Securities and Commodities Authority (SCA) of the UAE announced that it had begun accepting license applications from companies wishing to establish virtual asset-related businesses in the region. Now, all companies that provide virtual asset services in the UAE, aside from companies licensed in financial-free zones, are required to make their status official by submitting an application to obtain an operating license from the SCA. They are also required to obtain a license for the Dubai Virtual Asset Regulatory Authority (VARA).
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The Central Bank of the United Arab Emirates (CBUAE) is also progressing in the development of a central bank digital currency (CBDC). The first phase of the CBUAE’s CBDC strategy, which will take place over the next 12 to 15 months, has three goals: The soft launch of “mBridge,” which facilitates CBDC transactions for international trade, proof-of-concept work for bilateral CBDC bridges with India, one of the UAE’s top trading partners, and domestic CBDC issuance for wholesale and retail use.
The Dubai FinTech Summit, which took place on Monday and Tuesday, was organized by the DIFC and Standard Chartered was the host sponsor. The summit focused on education and networking, helping connect start-ups, investors and industry leaders.
“The demand for FinTech services has grown significantly in the last few years, powered by digital technologies and innovation across sectors,” said Mohammad Alblooshi, Head of DIFC Innovation Hub and FinTech Hive. “During 2022 alone, investment in DIFC’s FinTech and innovation community exceeded USD615 mn and the total number of active firms in the sector grew 36% to 686.”
“This partnership is a testament to our long-term commitment to creating a better future for the industry,” said Rola Abu Manneh, Chief Executive Officer of Standard Chartered Bank UAE. “As the region continues to witness increased digital transformation, especially across the financial sector, we expect the demand for digital financial services and products to continue to rise. This would likely spur a wave of innovation that will not only drive economic growth but also improve financial inclusion across the region.”
