Julian Sawyer, CEO of Zodia Custody, described the company’s pending acquisition by Standard Chartered as a “major validation” that highlights a growing reality in traditional finance: traditional banks cannot securely and efficiently create institutional-grade digital asset custody without appropriate software.
Instead of treating crypto as an isolated sector, Sawyer noted that the industry is reaching a point of maturity where the underlying blockchain infrastructure is evolving toward the tokenization of real-world assets and stablecoin payments.
“This is the maturity point where the custody of blockchain…moves from crypto to other assets, to stablecoins and tokenization,” he said in an interview with CoinDesk on Wednesday. “If you want to do this, you need trust. Trust is what banks do.” Because these financial use cases require absolute trust, global banks are moving toward acquiring established platforms to achieve immediate growth and secure bank-grade technology.
Sawyer noted that customer interest in their infrastructure software has increased significantly. “Every bank will need to know how to hold digital assets,” Sawyer said.
“The big guys are absolutely looking, and everyone who thinks about stablecoins… who thinks about tokenization needs to have an answer. So the market is huge.”
Acquisition of Standard Chartered
Sawyer confirmed that the full acquisition of the company by Standard Chartered is on track, with the aim of signing at the end of June and completion by the end of August.
He declined to disclose the purchase amount or valuation. In 2023, Zodia announced a $36 million funding round led by SBI Holdings. Market estimates place the custodian’s annual income at around $34.6 million. Market estimates place the custodian’s annual income at approximately $34.6 million, with current total funding of approximately $46 million.
He said that under the acquisition agreement, Standard Chartered’s existing digital custody businesses in Dubai, Luxembourg and Hong Kong will merge with Zodia Custody and ultimately be integrated into Standard Chartered under its brand, meaning Zodia Custody will not exist in the medium term.
Meanwhile, a new entity called Zodia Solutions will manage the company’s software and infrastructure, supported by existing banking shareholders including Northern Trust, Emirates NBD and National Australia Bank.
“This is a major validation,” Sawyer said, detailing the systemic impact of consolidation. “Every bank in the world is going to do something with digital assets…they’re going to need to know and have some technology to be able to hold these assets.”
Global regulation
Institutional integration requires regulatory convergence on a global scale. When asked if the UK was hesitant to become the crypto hub it aspires to be due to internal friction between the Bank of England, the Treasury and the Financial Conduct Authority (FCA), Sawyer acknowledged the changing trend.
“I suppose I’m old enough to remember the days when the FCA was ahead of the market and people were coming to the UK to set up shop,” Sawyer noted. “I think one of the fascinating aspects of our industry is that every jurisdiction, every government evolves at a different pace.”
He highlighted “tremendous progress” in Asia and Singapore, as well as new regulations in Hong Kong and Abu Dhabi. “The message I would like to convey is that this is a very evolving ecosystem and regulators and participants need to continue to evolve.”
While some in the industry fear that Wall Street giants will completely take over the sector, Sawyer suggests that the crypto industry is naturally moving toward banking due to compliance laws such as Know Your Customer (KYC) and Anti-Money Laundering (AML).
“The crypto industry is moving toward banking because of the law,” Sawyer said.
