Standard Chartered has launched Bitcoin and Ethereum trading for eligible wealthy clients in the United Arab Emirates. The new service lets professional investors buy and sell both assets through existing bank accounts, with custody and settlement handled inside the bank’s system.
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The October 14 announcement is the bank’s first crypto trading service for wealth clients. Dubai’s Virtual Assets Regulatory Authority (VARA) approved the offering. The bank said it plans to expand but named no markets or dates beyond the UAE.
Investment banking units of the bank and Zodia Markets, an affiliate of SC Ventures. It is revealed that only Bitcoin and Ethereum would be offered as cryptocurrencies under this initiative.
Who Can Use the New Crypto Service?
According to Standard Chartered, accessibility to this facility starts with the client being labeled as a professional investor in the UAE. This facility is not available to all personal banking clients. The announcement by Standard Chartered does not specify the full requirements for eligibility nor the minimum amount of investment needed.
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The eligible clients will be able to trade Bitcoin and Ethereum via their banking arrangement. It will not require the client to have an account on any crypto exchange or crypto wallet. Standard Chartered Bank was previously offering crypto investment via exchange-traded funds, structured products, and OTC derivatives.
These are different from crypto trading facilities. This facility will introduce direct crypto trading facility on the bank’s wealth management platform.
How Does Closed-Loop Trading Work?
The bank considers its service a closed-loop system where the transactions happen within the bank ecosystem and where custody and settlement happen. This means that the clients do not have to move their coins to another wallet to execute the trades.
There is no explanation in the announcement as to whether it is possible for the clients to transfer their purchased Bitcoin or Ether to some other wallets. Deposit transfers from other wallets are not considered too.
According to Standard Chartered, this approach helps to reduce the risk of using third-party wallets. However, there is no information about asset segregation, key management, or custody claims evidence provided by the bank. This can be found in the product agreement.
Custody by the bank does not mean that the coins become usual cash deposits, and prices are vulnerable to fluctuations in the crypto market.
What Role Does Zodia Markets Play?
Zodia Markets became part of the launch via the SC Ventures network of the bank. According to Standard Chartered, the deal combines the client connectivity, custody, and trading liquidity. In its release, the bank did not state the exact order execution path for each client.
Neither the bank nor anybody else disclosed any information about fees or pricing in this deal. It is an important detail to consider while comparing the prices at which orders were filled with the ones on other trading platforms.
How Is the UAE Service Regulated?
Standard Chartered reports that VARA has endorsed the new service for use in the UAE. The guidelines regulate issues such as classification of investors, contractual arrangements, and risk disclosures. The first offering is limited to professional investors only.
This endorsement is separate from the bank’s previous introduction of an institutional offering in its DIFC branch. In September, Standard Chartered introduced spot trading for eligible institutional clients regulated by the Dubai Financial Services Authority.
The wealth offering operates under different regulators and target clients. Grouping both introductions as a single general retail offering would be an oversimplification. The October offering makes no mention of timing for the inclusion of other types of customers.
What Comes Next for Standard Chartered?
This bank is set to extend its wealth solution beyond its current market, though there have been no announcements regarding where and when the expansion will happen. This bank also has an institutional custody and tokenization solution.
At present, eligible UAE customers are allowed to trade BTC and ETH through the bank’s platform. There is a need for additional information about the product in relation to fees, external transfers, and custody.
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