Zodia Custody—the crypto-focused subsidiary of British multinational bank Standard Chartered—plans to allow its clients to earn yield on their crypto holdings.
The crypto custodian has partnered with OpenEden for the “Zodia Custody Yield” service, which tokenizes real-world assets like treasury bills and lets investors earn yield while leveraging the benefits of blockchain.
The yield offering lets institutional investors “access off-chain yield potential for their on-chain assets without compromising on the bank-grade security of Zodia Custody’s platform,” reads a press release from the firm. That includes staking, whereby crypto owners lock up their digital assets to secure the blockchain while earning periodic crypto rewards in return.
Staking is a compelling earning opportunity for crypto businesses but a regulatory trap for U.S.-based firms. Companies like Kraken and Coinbase have already been sued by the Securities and Exchange Commission (SEC) for offering similar products to retail customers without providing required risk disclosures.
European firms, however, are getting on board: German exchange giant Boerse Stuttgart Group announced a similar staking service for institutional clients earlier this month, citing “increasing interest from institutional investors in the staking sector.”
Likewise, Zodia said that its service responds to demand among institutions for “low-risk, liquid, and transparent” digital asset products “with respect to how returns are generated for stablecoin holders.”
Stablecoins are blockchain-based tokens backed by fiat currencies like dollars, making them a popular form of value transfer and loan collateral in the blockchain and DeFi ecosystems.
“There are billions of dollars worth of stablecoins sitting on the sidelines when they could easily be generating yields for investors,” said Jeremy Ng, co-founder of OpenEden, in a statement. “That’s a huge opportunity, and one that we and Zodia Custody hope to bring to institutions.”
The company hopes to do so, Ng explained, “through tokenized financial products in a way that is both safe and transparent.”
Julian Sawyer, CEO of Zodia Custody, added that there is “a lot in the world of traditional finance that can be moved to digital assets.”
Zodia announced the expansion of its crypto custody services to Singapore just days ago.