It will house the new business within its wholly owned venture capital unit, SC Ventures
[SINGAPORE] Standard Chartered plans to set up a prime brokerage for cryptocurrency trading, sources said, as global banks step up efforts to compete in digital assets.
The London-based lender will house the new business within its wholly owned venture capital unit SC Ventures, said sources who asked to be anonymous as the plans are not public. Discussions are at an early stage, and it is not clear when the service will launch, they added.
StanChart has been one of the more active global banks in digital assets, backing ventures including crypto custodian Zodia Custody and institutional trading platform Zodia Markets.
In July, it said that it became the first global systemically important bank to offer spot crypto trading for institutional clients.
A spokesperson for SC Ventures declined to comment.
In a December LinkedIn post, SC Ventures said that it is developing a digital-asset joint venture (JV) called Project37C, calling it a “light financing and markets platform”.
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The announcement said that the JV will offer custody, tokenisation and market access, without naming any external partners or calling it a prime brokerage.
Setting up the new business within SC Ventures may help StanChart avoid absorbing strict capital requirements for digital assets in its corporate and investment bank.
Under Basel III rules conceived in late 2022, the banks face a 1,250 per cent risk charge for exposure to “permissionless” crypto assets such as Bitcoin and Ether on their balance sheets.
That is far higher than for other risky assets, such as the 400 per cent applied to some venture capital investments under the latest Basel capital package.
In October, it was reported that global regulators were in talks about overhauling rules governing banks’ crypto holdings.
Rush into crypto
The US banks are also wading deeper into crypto, a year after Donald Trump returned to the White House with an industry-friendly agenda. In December, it was reported that JPMorgan Chase was considering offering crypto trading to its institutional clients.
Morgan Stanley last week filed to introduce Bitcoin, Ether and Solana exchange-traded funds (ETFs), an initiative that would see it compete with the likes of BlackRock and ARK Investment Management.
US spot crypto ETFs have swelled to oversee roughly a combined US$140 billion since they were first approved two years ago, ushering in more institutional participation in digital assets.
Prime brokerages provide services such as financing, securities lending and custody, allowing investors to manage risk and trade more efficiently across markets.
As more institutional money flows into crypto, this corner of the industry has seen a rush of dealmaking, underscoring how it has become a key element for the market’s next phase of growth.
In April, digital-asset company Ripple bought prime brokerage Hidden Road for US$1.3 billion in one of the sector’s biggest deals at the time. Crypto prime broker FalconX in October agreed to acquire 21Shares, one of the largest issuers of crypto ETFs. BLOOMBERG
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