Zodia Custody to Offer Yield on Crypto Holdings
Zodia Custody, a subsidiary of Standard Chartered Bank, is planning to introduce a service that allows clients to earn yield on their cryptocurrency holdings. The crypto custodian has partnered with OpenEden to launch the “Zodia Custody Yield” service, which tokenizes real-world assets such as treasury bills and enables investors to earn yield while leveraging the benefits of blockchain technology.
The offering provides institutional investors with access to off-chain yield opportunities for their on-chain assets without compromising the security provided by Zodia Custody’s platform. This includes staking, a process where crypto owners lock up their digital assets to secure the blockchain and receive periodic crypto rewards in return.
European Firms Embrace Staking Services
While staking presents a lucrative opportunity for crypto businesses, U.S.-based companies have faced regulatory challenges. Kraken and Coinbase have been sued by the Securities and Exchange Commission (SEC) for offering similar products without providing necessary risk disclosures. In contrast, European firms are embracing staking services. Boerse Stuttgart Group, a German exchange giant, recently announced a staking service for institutional clients due to increasing interest in the sector.
Meeting Institutional Demand for Low-Risk Digital Asset Products
Zodia’s new service caters to institutional demand for low-risk, liquid, and transparent digital asset products. It specifically addresses the generation of returns for stablecoin holders. Stablecoins are tokens backed by fiat currencies like dollars and are commonly used for value transfer and loan collateral in the blockchain and DeFi ecosystems. Jeremy Ng, co-founder of OpenEden, emphasized the potential opportunity to generate yields from billions of dollars worth of stablecoins that are currently idle.
Moving Traditional Finance to Digital Assets
Julian Sawyer, CEO of Zodia Custody, believes that many aspects of traditional finance can be transitioned to digital assets. The company aims to achieve this by offering tokenized financial products that are safe and transparent. Zodia Custody recently expanded its crypto custody services to Singapore.
Hot Take: Unlocking the Yield Potential of Crypto Holdings
Zodia Custody’s partnership with OpenEden and the introduction of the “Zodia Custody Yield” service marks an important step in unlocking the yield potential of crypto holdings for institutional investors. By tokenizing real-world assets and leveraging blockchain technology, Zodia Custody enables clients to earn yield on their on-chain assets while maintaining bank-grade security. This move aligns with the growing interest in staking services among European firms and addresses the demand for low-risk and transparent digital asset products. It also highlights the opportunity to generate yields from stablecoins, which currently sit idle. As more traditional finance practices are moved to digital assets, the crypto industry continues to evolve and offer innovative solutions for investors.
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