TLDR

• Zodia Markets, a crypto subsidiary of Standard Chartered, is reportedly in talks to acquire Elwood Capital Management
• Elwood Capital is backed by billionaire hedge fund manager Alan Howard and offers OTC crypto trading and settlement services
• The acquisition would give Zodia Markets licenses as a virtual asset provider and investment business in Jersey
• Zodia Markets had previously paused its operations due to low demand for crypto products
• Standard Chartered is reportedly planning to launch its own Bitcoin and Ether trading desk

Zodia Markets, the crypto subsidiary of British multinational bank Standard Chartered, is reportedly in advanced talks to acquire Elwood Capital Management. This development, reported by Bloomberg, highlights the increasing convergence of traditional banking and digital assets.

Elwood Capital Management, a crypto firm backed by billionaire hedge fund manager Alan Howard, offers over-the-counter (OTC) crypto trading and settlement services.

The acquisition, expected to close by the end of July, would provide Zodia Markets with valuable licenses as a virtual asset provider and investment business in Jersey, a British Crown Dependency known for its favorable financial regulations.

This strategic move comes at a pivotal time for Zodia Markets. Launched in 2021 as a joint venture between Standard Chartered’s venture capital arm and Hong Kong’s BC Technology Group, the crypto exchange had to pause its operations earlier this year due to low demand for crypto products.

The acquisition of Elwood Capital could potentially rejuvenate Zodia’s business by expanding its capabilities in OTC settlement services.

The deal, if finalized, would align with Standard Chartered’s broader push into the cryptocurrency space. Recent reports suggest that the bank is exploring the launch of its own trading desk for Bitcoin and Ether, a move that would position it among the first global banking institutions to become directly involved in spot trading of cryptocurrencies.

For Alan Howard, the sale of Elwood Capital appears to be part of a larger strategy. Earlier this year, the billionaire hedge fund manager put several of his private holdings in crypto companies up for sale, with the intention of reinvesting the proceeds into Brevan Howard Digital, his hedge fund’s crypto subsidiary. This reshuffling of assets underscores the dynamic nature of investments in the rapidly evolving cryptocurrency sector.

The potential acquisition also reflects the growing trend of traditional financial institutions seeking to establish a foothold in the crypto market.

Despite the volatility and regulatory challenges associated with digital assets, many banks and financial services firms are recognizing the need to adapt to changing customer demands and technological advancements.

Zodia Markets’ interest in Elwood Capital is particularly noteworthy given the latter’s focus on OTC trading and settlement services. As institutional interest in cryptocurrencies continues to grow, OTC services have become increasingly important, allowing large trades to be executed without significantly impacting market prices.

The acquisition would also provide Zodia Markets with an established platform and expertise in the crypto OTC space, potentially accelerating its ability to serve institutional clients. This could be crucial as competition in the institutional crypto services sector intensifies, with both crypto-native firms and traditional financial institutions vying for market share.

For Standard Chartered, this move represents another step in its ongoing engagement with the crypto sector. The bank has been gradually increasing its involvement in digital assets, having previously invested in Ripple and launched Zodia Custody, a separate entity providing cryptocurrency custodial services.