Standard Chartered-backed cryptocurrency custody subsidiary, Zodia Custody, has raised $36 million in a new series A funding round. This round was led by Japanese financial conglomerate SBI Holdings, which has now become Zodia’s second-largest shareholder. Zodia plans to use the funds to increase the number of supported cryptocurrencies, including staked Ether, and to expand its services geographically. The firm is looking to expand to the Middle East but will avoid the United States due to regulatory uncertainty.
Zodia’s CEO, Julian Sawyer, emphasized that it is typical of Standard Chartered’s venture strategy to raise external funding after a subsidiary reaches a certain level of growth. This funding round was a continuation of that strategy. Sawyer stated, “It is part of our strategy to be bank-backed, and all the good things that that brings. That doesn’t mean there has to be a single bank.”
Zodia’s expansion plans follow a joint venture with SBI Holdings in Japan in February 2023, which is owned 51% by SBI Digital Asset Holdings and 49% by Zodia Custody. The firm is targeting only institutional investors in both its global and Japanese operations.
Zodia’s bullish outlook on the crypto industry contrasts with a recent report by Thorn, which predicted that until macroeconomic and cryptocurrency market conditions improve, it will be challenging for crypto and Web3 companies to raise money in 2023. Thorn indicated that while there were 2,900 venture deals in 2022, the fourth quarter saw the fewest deals and the least amount of cash committed to Web3 and crypto companies in the previous two years.
Despite this, Standard Chartered’s head of digital assets research, Geoff Kendrick, is optimistic about Bitcoin’s future. In his report titled “Bitcoin — Pathway to the USD 100,000 level,” Kendrick predicts that Bitcoin could potentially reach the USD $100,000 level by the end of 2024. Kendrick believes that the recent instability in the banking sector, the end of the US Federal Reserve’s rate-hiking cycle, and the improved profitability of crypto mining will all benefit Bitcoin in the long run.
Zodia’s expansion plans and SBI Holdings’ investment in the firm indicate growing interest in the crypto industry, particularly among institutional investors. However, the regulatory uncertainty in the United States is still a concern for many firms in the industry. Zodia plans to stay away from the United States due to the lack of clarity regarding what cryptocurrencies should be considered securities. This presents an opportunity for other regions, such as the Middle East, to become leaders in the crypto industry.