Compass Investments

There is a tangible redistribution of power in the digital asset custody market, with global banks no longer remaining neutral. Highlights:

21Shares, by choosing Standard Chartered, demonstrates the transition of the role of custodians from crypto firms to traditional banks.

This maneuver demonstrates the desire of major banks to directly control the infrastructure of digital assets, rather than relying on their subsidiaries.

The trend reflects growing institutional demand for bank-level storage services as opposed to purely cryptographic solutions.

The latest confirmation came when 21Shares entered into an agreement with Standard Chartered to secure its digital assets, prompting one of the world’s greatest banking groups to dive deeper into crypto infrastructure.

The significance of this deal lies not so much in the services provided, but in the type of institution providing them. Once upon a time, cryptocurrencies dominated the digital asset protection industry, while large banks either shunned the sector or used affiliated structures to keep their distance. Now the situation is different: banks are becoming directly involved in the process, and the hegemony of specialized crypto providers is weakening.

Standard Chartered has taken a different stance this year. Rather than continuing to leverage its “subsidiaries” for digital asset transactions, the bank is now bringing custodial relationships under its main brand, starting with 21Shares. This decision is a major departure from 2020, when Standard Chartered co-founded Zodia Custody precisely to keep crypto activities structurally separate from its core banking business.

Since 21Shares had previously placed assets in Zodia, the mainstream bank’s entry into the custody operations raises questions about Zodia’s future: whether it will continue to operate in parallel or be squeezed out over time. Neither side has made clear its long-term model, fueling speculation that the big banks may gradually take market share away from the specialized firms they helped create.

For 21Shares, the driving force is not ideology but commercial necessity.

The company needs custody partners that are perceived by conventional institutions as familiar and trustworthy. According to Mandy Chiu, head of product development, 21Shares prioritizes infrastructure that meets the standards of traditional securities markets, including long-established risk management, regulated custody and global banking compliance.

Standard Chartered recently launched a custody service for digital assets in Luxembourg and previously opened an institutional crypto trading unit.

Similar movements are seen across the sector.

– US Bancorp resumed cryptocurrency custody services after a temporary suspension due to regulatory uncertainty.

– Citigroup is considering introducing support for cryptocurrencies and payment systems.

Deutsche Bank is in the process of opening a cryptocurrency vault for customers of its investment banking division.

The big picture is clear: the once-cautious financial giants are now building an infrastructure that puts them at the heart of the digital asset economy, not just next to it.

This turnaround has sparked debate among crypto market veterans. Critics argue that a market based on decentralized principles will inevitably consolidate under the rule of the same financial institutions it originally sought to circumvent. Supporters, on the other hand, believe that regulated banks will accelerate mass adoption and eliminate counterparty risk, which has traditionally deterred conservative investors.

The split intensified after BlackRock confirmed that more than $3 billion in bitcoin has already been transferred into ETF form, with clients increasingly opting to hold it through their usual banking and wealth management channels rather than self-storage.