Standard Chartered Introduces Spot Crypto Trading Amid Growing Institutional Demand

By Jody McDonald June 24, 2024 In Banking, Banks, Bitcoin, Cryptocurrency, Digital Asset Mining, Trading

Source:AdobeStock

Standard Chartered hopes to launch a trading desk for Bitcoin and Ether, becoming one of the first global banks to enter spot cryptocurrency trading.
While banks like Goldman Sachs have traded cryptocurrency derivatives, strict regulations have made direct trading in cryptocurrencies less attractive.

Demand from institutional investors will see Standard Chartered open a crypto desk to allow clients to trade Bitcoin and Ethereum—making it one of the first international banks to directly trade crypto— according to a report from Bloomberg.

Sources that spoke to Bloomberg anonymously said the new crypto desk would form part of the bank’s foreign currency exchange (FX) trading unit and would be run from London, where Standard Chartered is headquartered.

Standard Chartered is among the world’s top 50 largest banks, so its move to offer spot trading in cryptocurrencies would be a momentous sign for crypto’s future role in TradFi. In an emailed statement the bank said:

We have been working closely with our regulators to support demand from our institutional clients to trade Bitcoin and Ethereum, in line with our strategy to support clients across the wider digital asset ecosystem, from access and custody to tokenization and interoperability.

Standard Chartered

Banks Expanding Digital Asset Offerings

Standard Chartered’s foray into digital assets prior to this news includes funding a blockchain-based platform to tokenise government bonds called Libeara, and backing two crypto trading platforms—Zodia Markets and Zodia Custody.

A growing number of banks globally have been exploring CBDC projects, providing custody services for clients crypto, and developing private blockchain and tokenisation platforms.

Capitalising on the rising tide of Bitcoin spot ETFs, a number of banks added these products to their investment options. A smaller number of banks offer Bitcoin and Ether options and futures trading, including JP Morgan Chase, Goldman Sachs and Bank of America.

Directly trading in the underlying tokens is a more costly exercise, as global standards around banks’ exposures to crypto assets require them to add a 1,250% risk weighting to unhedged cryptocurrencies.

The Basel Committee on Banking Supervision requires that for each separate crypto asset to which a bank is exposed, it must apply a risk weight of 1,250% to ensure it holds minimum capital equal to “the greater of the absolute value of the aggregate long positions and the absolute value of the aggregate short positions.”