TLDR
- Zodia Markets, Standard Chartered’s crypto arm, is in talks to acquire Elwood Capital Management, a crypto OTC firm backed by billionaire Alan Howard.
- The acquisition would provide Zodia Markets with licenses as a virtual asset provider and investment business in Jersey.
- Standard Chartered is reportedly planning to launch its own trading desk for Bitcoin and Ether.
- Zodia Markets previously paused its operations due to low demand for crypto products.
- Elwood Technologies, Elwood Capital’s parent company, is refocusing its business strategy on portfolio and risk management services.
Zodia Markets, the crypto subsidiary of Standard Chartered, is reportedly in late-stage talks to acquire Elwood Capital Management.
This development comes as Standard Chartered itself is rumored to be planning a foray into direct cryptocurrency trading.
Zodia Markets, a joint venture between Standard Chartered’s venture capital arm and Hong Kong’s BC Technology Group, launched in 2021 as a crypto exchange.
However, earlier this year, the firm had to pause its operations due to low demand for crypto products, according to CEO Usman Ahmad.
The potential acquisition of Elwood Capital Management, a firm backed by billionaire hedge fund manager Alan Howard, could mark a significant turning point for Zodia Markets.
Elwood Capital specializes in over-the-counter (OTC) crypto trading and settlement services for its clients. If the deal goes through, it would provide Zodia Markets with licenses to operate as a virtual asset provider and investment business in Jersey, an island British crown dependency.
This acquisition is expected to bolster Zodia’s efforts to focus on OTC settlement services, an area of growing importance in the crypto industry.
The deal, reportedly in its final stages, is anticipated to close before the end of July, although the exact transaction size remains undisclosed.
Meanwhile, Standard Chartered, Zodia’s parent company, is making its own moves in the crypto space. Reports suggest that the British multinational bank is exploring the launch of its own trading desk for Bitcoin and Ether.
If realized, this would position Standard Chartered as one of the first global banking institutions to engage directly in spot trading of cryptocurrencies.
These developments come at a time when the crypto industry is experiencing significant changes and increased attention from traditional financial institutions.
Elwood Technologies, the parent company of Elwood Capital, raised $70 million from investors including Goldman Sachs and Dawn Capital in 2018. However, the company reported a loss of $16.9 million for the fiscal year ending March 2023.
Interestingly, Elwood has been considering selling part of its business since late May. The London-headquartered firm has reportedly re-evaluated its roadmap and decided to focus more on portfolio management and risk management services rather than trading.
Alan Howard, the billionaire hedge fund manager behind Elwood, has also been making moves in the crypto space. In February, he put several of his private holdings in crypto companies up for sale, with the intention of reinvesting the earnings into Brevan Howard Digital, his hedge fund’s crypto subsidiary.
While Zodia Markets focuses on expanding its OTC services, its sister company, Zodia Custody, is also making strides. In late June, Zodia Custody secured funding from NAB Ventures, the venture capital arm of National Australia Bank.
With this funding, Zodia Custody plans to increase its efforts in Australia, particularly in onboarding local digital asset exchanges in anticipation of regulatory changes expected by 2025.
These developments highlight the growing interest of traditional financial institutions in the cryptocurrency sector.
As banks and financial firms explore ways to integrate digital assets into their services, acquisitions and partnerships like the potential Zodia-Elwood deal may become more common.
