Standard Chartered Bets on Ethereum’s Next Cycle

Core Viewpoint - Standard Chartered is planning to establish a crypto prime brokerage through its venture arm, SC Ventures, to navigate Basel III capital requirements and enhance its presence in institutional crypto markets [2][3][4]. Group 1: Strategic Initiatives - The proposed crypto prime brokerage will offer financing, custody, and trading services specifically for institutional clients, operating outside the bank's core corporate and investment banking division [3]. - By structuring the crypto initiative within SC Ventures, Standard Chartered aims to mitigate the capital burden associated with crypto exposure, which is significantly higher under Basel III regulations [4]. Group 2: Regulatory Context - Basel III rules impose a 1,250% risk weighting on "permissionless" crypto assets like Bitcoin and Ether, making it costly for banks to hold such assets on their balance sheets [4]. - The bank's strategy to route crypto activities through a venture-style unit may allow it to operate under a more capital-efficient framework while adhering to regulatory standards [4]. Group 3: Broader Crypto Strategy - Standard Chartered has been actively supporting institutional platforms, including Zodia Custody and Zodia Markets, and was the first global systemically important bank to offer spot crypto trading to institutional clients [5]. - The bank is also working on Project37C, a digital-asset joint venture that focuses on custody, tokenization, and market access, further solidifying its commitment to the crypto space [5]. Group 4: Market Outlook - The bank's research indicates a positive outlook for Ethereum, suggesting it may outperform Bitcoin, which could influence its investment strategies in the digital asset market [6].