Zodia CEO: Every Bank Will Eventually Need to Hold Digital Assets

Julian Sawyer, CEO of Zodia Custody, described Standard Chartered's ongoing acquisition of the firm as a "major validation" that highlights an inconvenient truth for legacy finance: banks cannot realistically build institutional-grade digital asset custody safely or efficiently without dedicated software. Sawyer noted that the industry is hitting a maturity point where the underlying blockchain infrastructure is moving toward real-world asset tokenization and stablecoin payments. "This is the maturity point of where custody of the blockchain...is moving from crypto to other assets, stable coins and tokenization," he said in an interview with CoinDesk on Wednesday. "If you're going to do that, you need trust. Trust is what banks do." Because these financial use cases require institutional-grade trust, global banks are now moving to acquire established platforms to gain immediate scale and bank-grade tech. Sawyer noted that client interest in the firm's infrastructure software has scaled dramatically. "Every single bank is going to need to know how to hold digital assets," Sawyer said. "The big guys are absolutely looking, and everybody else who's thinking about stablecoins... thinking about tokenization needs to have an answer. So the market is huge." Sawyer confirmed that Standard Chartered's full acquisition of the firm is on track to target a signing at the end of June and complete 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, with market estimates placing the custodian's annual revenue at roughly $34.6 million and total funding at roughly $46 million. He said that under the acquisition agreement, Standard Chartered's existing digital custody business in Dubai, Luxembourg, and Hong Kong will merge with Zodia Custody and ultimately fold into Standard Chartered under its brand, meaning Zodia Custody will not exist in the medium term. Concurrently, a new entity called Zodia Solutions will carry forward the software and infrastructure side of the business, backed by existing bank shareholders including Northern Trust, Emirates NBD, and National Australia Bank. "This is a major validation," Sawyer said, detailing the systemic impact of the consolidation. "Every bank in the world is going to do something with digital assets...they are going to need to know and have some technology to be able to hold those assets." Institutional integration is forcing a regulatory convergence worldwide. When asked whether the U.K. is holding back from becoming 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 shifting tides. "I guess I'm old enough to remember when the FCA was ahead of the market and people did come to the UK to set up," Sawyer noted. "I think one of the fascinating parts of our industry is that each jurisdiction, each government, is moving at a different pace." He highlighted "huge progress" in Asia and Singapore, as well as new regulations in Hong Kong and Abu Dhabi. "The message I would have is this is a very evolving ecosystem and that regulators and the participants need to continue to evolve." While some industry participants worry that Wall Street giants will completely take over the sector, Sawyer suggests the crypto industry is naturally moving toward banking due to compliance laws like Know Your Customer (KYC) and Anti-Money Laundering (AML). "The crypto industry is moving towards banking because of the law," Sawyer stated.