Standard Chartered's Zodia Custody Raises $50M to Expand Crypto Custody Services Amidst Increasing Competition

Institutional Investors Drive Demand for Crypto Custody

Standard Chartered’s crypto custody business, Zodia Custody, is reportedly planning to raise $50 million to expand its footprint in the digital asset custody market.

According to a report by The Block on Monday, Zodia is in talks to raise the funds to expand into new markets. Notably, the fresh funding round will differ from past efforts, which involved wholesale financial institutions.

This time around, Zodia will reportedly seek investment from angel investors, payments firms, and tokenization platforms. The report adds that crypto-focused advisory firm Architect Partners is assisting Standard Chartered’s custody business in securing the funding.

The move comes after Zodia raised $36 million in a Series A funding round in May 2022. The funding round was led by SBI Holdings, which became the second-largest shareholder in Zodia after Standard Chartered.

The fresh funding effort comes amid increasing competition in the crypto custody industry, with both traditional financial institutions and digital asset companies offering custody services. Major traditional banks like BNY Mellon, State Street, and Citigroup have entered the market alongside established crypto players like Komainu.

The demand for secure custody solutions is being driven by institutions seeking exposure to cryptocurrencies, which are still perceived as risky due to increasing cyberattacks and significant asset losses.

With more institutional players expected to seek exposure to cryptocurrencies in the coming years, demand for custody services is expected to grow, prompting firms like Zodia to target new markets and launch new products.

However, despite becoming an important part of the digital asset ecosystem, crypto custody businesses face certain disadvantages that may deter some users. Fees associated with custody services and regulatory uncertainty are some factors impacting the growth of custody businesses.

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