$850 Billion Standard Chartered To Set Up Prime Brokerage For Crypto Trading

Standard Chartered is looking at expanding into crypto trading through a prime brokerage service. The London-based bank has approximately $850 billion assets under management and is aiming to fulfill institutional needs to trade crypto.

Why Banks Employ Crypto Prime Brokerages

According to a Bloomberg report, the prime brokerage will enable the bank to make the trading of cryptos accessible to its professional investors. This service will be supplemented by financing, custody and risk-management tools that can make institutions trade the financial markets more efficiently.

The optimistic XRP price outlook by Standard Chartered is an indicator of greater institutional confidence in digital currencies. According to Bloomberg, the new crypto business will be launched under SC Ventures. This is the venture capital and innovation arm of the bank. Negotiations are still in early stages and there is no specific time for when it will be launched.

The establishment of the crypto prime brokerage unit in SC Ventures would minimize regulatory complexes. When banks keep crypto assets directly, they have to satisfy strict capital regulations. This design will enable Standard Chartered to expand without increasing balance sheet risk.

In Basel III, any exposure by banks to permissionless crypto-assets like Bitcoin and Ether is punished with great financial consequences. The risk weight can rise up to 1,250%.

What Is the Reason Behind Crypto Prime Brokerage’s Growth?

The continued interest in the cryptocurrency market has made prime brokerage a point of strategic focus. These services have enabled large investors to manage leverage, liquidity and custody using a single platform. The number of people seeking it has increased due to the increase in capital flows from institutions.

This trend is revealed by recent acquisitions. Ripple purchased prime broker, Hidden Road at $1.25 billion and FalconX purchased ETF issuer 21Shares.

Hence, the intended move by Standard Chartered is an indication that the bank will engage more in crypto infrastructure. When it starts, the prime brokerage would further improve institutional access and a further advancement towards integrating crypto into global finance.

Banks Accelerate Crypto Involvement

Standard Chartered has already invested in crypto. The bank works with several institutional platforms which include Zodia Custody and Zodia Markets. It also became one of the largest banks in the world to provide spot crypto trading in July.

A forecast of Bitcoin price by Standard Chartered points to its optimistic position on crypto market growth. In addition, this initiative is an indicator of increasing competition in the world’s top financial institutions.

Cryptocurrencies are getting more exposure from institutions as regulated investment products are expanding in the U.S. Currently, crypto ETFs in the country hold combined crypto assets of over $140 billion.