Standard Chartered Plc, a British multinational bank, is gearing up to introduce a trading desk for Bitcoin and Ethereum, positioning itself as one of the first global banks to engage in spot cryptocurrency trading. This new trading desk will be part of the bank’s FX trading unit and will operate from London.
Regulatory and Market Context
Historically, many banks, including Goldman Sachs Group Inc., have restricted their cryptocurrency activities to derivatives due to stringent regulations preventing direct involvement with the underlying assets. The Basel Committee on Banking Supervision has proposed that banks burden any unhedged cryptocurrency exposure with a risk weighting of 1,250%, making profit generation more challenging.
Close Collaboration with Regulators
Standard Chartered stated that it is working closely with regulators and institutional clients to facilitate Bitcoin and Ethereum trading. The bank aims to support clients across the digital asset ecosystem, providing services such as access, custody, tokenization, and interoperability.
Expanding into the Crypto Space
Despite regulatory challenges, Standard Chartered is one of the larger banks moving deeper into crypto, driven by institutional client demand. The bank has invested in Zodia Custody and Zodia Markets, offering services from custody to over-the-counter trading. In November, the bank launched Libeara, a blockchain unit aimed at tokenizing traditional assets. Libeara is currently helping create a tokenized government bond fund using the Singaporean dollar.
Also Read: Crypto Trading Firm Cumberland Secures New York BitLicense
Market Dynamics and Institutional Interest
Even though Bitcoin has dropped over 20% since early 2024 and hit its lowest level since May 15, Standard Chartered is still planning to launch its trading desk. This move comes despite Bitcoin’s price drop but is encouraged by the successful launch of US Bitcoin exchange-traded funds (ETFs) in January, which has improved market liquidity and attracted more large institutions to the digital asset space.
Standard Chartered’s decision to establish a Bitcoin and Ethereum trading desk marks a significant step in integrating traditional banking with the cryptocurrency market. By working closely with regulators and leveraging its investments in crypto-related services, the bank is poised to meet growing institutional demand and navigate the evolving regulatory landscape.
