Standard Chartered-owned crypto firm Zodia launches in Singapore

Zodia Custody, a company that helps large institutions store their cryptocurrencies, launched in Singapore on Tuesday in a bid to tap into the country's rapidly growing digital asset market.

The development makes Zodia the first entity owned and partnered with banks to provide digital asset custody services for financial institutions in Singapore, Zodia said in a press release.

Zodia is a subsidiary of Standard Chartered, the British bank with a presence mainly in emerging markets, such as Asia, Africa and the Middle East. StanChart launched Zodia in 2021 alongside Northern Trust, in a move that highlighted large institutions' curiosity to engage with digital currencies. Zodia is also partially owned by SBI Digital Asset Holdings, the cryptocurrency division of Japanese bank SBI. As part of that deal, SBI also agreed to launch its custody business in Japan.

Zodia said it wants to expand across Asia-Pacific to meet growing demand from banking-level digital asset custody institutions, as well as demand from existing customers in the region, the company said.

Singapore is "getting to the next level of maturity" in terms of formulating rules for crypto assets and developing central bank digital currencies, Zodia CEO Julian Sawyer told CNBC in a phone call. Sawyer was previously a co-founder of Starling Bank.

“Singapore is a market that has been no stranger to the world of cryptocurrencies for a long time,” Sawyer said. "We want to be a part of it. We think the market for a bank-owned custodian is actually what the market is looking for."

Zodia works with clients ranging from hedge funds and high-frequency traders to top-tier brokers, exchanges and asset managers.

Standard Chartered has a "fantastic brand" in Singapore, Sawyer said, adding that the backing of such a large institution has helped boost its conversations with major financial firms. “Being part of Standard Chartered comes up in every conversation,” she told CNBC. "It's absolutely critical."

"We embrace your risk, compliance frameworks, information security, resilience, [and] people management," he added.

Singapore has seen rapid growth when it comes to the adoption of digital assets. The city-state's cryptocurrency ownership rate is 19%, according to market research firm Statista, higher than the global average of 15%.

Funding for cryptocurrency companies in Singapore has also remained strong despite the bear market the industry suffered following the collapse of FTX, Three Arrows Capital, Terra and several other previously prominent names.

Cryptocurrencies or blockchain were the top area of ​​fintech investment in Singapore in 2022, generating $1.2 billion in funding in 2022, according to KPMG's Pulse of Fintech report for the second half of 2022. However, funding related to Cryptocurrencies still fell by 21%. . Globally, cryptocurrency startups raised $23.1 billion in 2022, down 23% from the previous year.

Zodia's move to Singapore comes on the heels of an expansion into Abu Dhabi. The company obtained in-principle regulatory approval in Abu Dhabi earlier this month in a bid to take advantage of the UAE capital's crypto-friendly regulatory environment and financial hub status.

LOOK: Coinbase 'committed to India' despite halting new user registration on exchange: CNBC Crypto World