News
Standard Chartered’s Zodia Markets in talks to acquire OTC cryptocurrency firm
Summary
- Zodia Markets, a cryptocurrency-focused subsidiary of Standard Chartered, is reportedly in talks to acquire Elwood Capital Management
- Elwood Capital is backed by billionaire hedge fund manager Alan Howard and offers OTC cryptocurrency trading and settlement services
- The acquisition would give Zodia Markets licenses as a virtual asset provider and investment business in Jersey
- Zodia Markets had previously suspended its operations due to low demand for crypto products
- Standard Chartered is reportedly planning to launch its own Bitcoin and Ether trading desk
Zodia Marketsthe crypto branch of the British multinational bank Standard Chartered, is reportedly in advanced talks to acquire Elwood Capital Management. This development, reported by Bloomberg, highlights the growing convergence between traditional banking services and digital assets.
Elwood Capital Management, a cryptocurrency firm backed by billionaire hedge fund manager Alan Howard, offers over-the-counter (OTC) cryptocurrency trading and settlement services.
The acquisition, expected to close by the end of July, would secure Zodia Markets valuable licenses as a virtual asset provider and investment firm in Jersey, a British Crown dependency known for its favorable financial regulations.
The strategic move comes at a crucial time for Zodia Markets. Launched in 2021 as a joint venture between Standard Chartered’s venture capital arm and Hong Kong’s BC Technology Group, the cryptocurrency exchange had to suspend operations earlier this year due to low demand for crypto products.
The acquisition of Elwood Capital could potentially revitalize Zodia’s business, expanding its capabilities in OTC settlement services.
The deal, if finalized, would align with Standard Chartered’s broader push into the cryptocurrency space. Recent reports suggest the bank is considering launching its own trading desk for Bitcoin and Ether, a move that would position it among the first global banks to get directly involved in spot cryptocurrency trading.
For Alan Howard, the sale of Elwood Capital appears to be part of a larger strategy. Earlier this year, the billionaire hedge fund manager put several of his private holdings in cryptocurrency companies up for sale, with plans to reinvest the proceeds in Brevan Howard Digital, his hedge fund’s cryptocurrency subsidiary. The asset shuffle underscores the dynamic nature of investing in the rapidly evolving cryptocurrency space.
The potential acquisition also reflects the growing trend of traditional financial institutions trying to gain a foothold in the cryptocurrency market.
Despite the volatility and regulatory challenges associated with digital assets, many banks and financial services firms are recognizing the need to adapt to changing customer demands and technological advances.
Zodia Markets’ interest in Elwood Capital is particularly noteworthy given the latter’s focus on OTC trading and settlement services. As institutional interest in cryptocurrencies continues to grow, OTC services have become increasingly important, allowing large trades to be executed without significantly impacting market prices.
The acquisition would also provide Zodia Markets with an established platform and expertise in the OTC cryptocurrency space, potentially accelerating its ability to serve institutional clients. This could be crucial as competition in the institutional crypto services sector intensifies, with both crypto-native firms and traditional financial institutions competing for market share.
For Standard Chartered, the move represents another step in its ongoing engagement with the cryptocurrency space. The bank has been gradually increasing its involvement in digital assets, having previously invested in Ripple and launched Zodia Custody, a separate entity that provides cryptocurrency custody services.