Photo credit: Hollie Adams/Bloomberg

Zodia Markets, Standard Chartered’s institutional crypto trading unit, is in advanced discussion to acquire Elwood Capital Management, a digital asset firm backed by billionaire hedge fund manager Alan Howard, Bloomberg reported on July 9.

The deal, expected to close this month, would bolster Zodia’s focus on over-the-counter (OTC) settlement services by providing it with virtual asset service provider and investment business licenses in Jersey — a British Crown Dependency located near the coast of Normandy, France — Bloomberg’s sources said. The financial terms of the potential acquisition remain undisclosed.

The talks come as Standard Chartered deepens its push in the digital assets space. The banking giant has already indicated plans to establish a trading desk for Bitcoin and Ether, signaling a broader embrace of cryptocurrencies.

The latest move aligns with Zodia’s recent pivot away from its crypto exchange platform, which was shuttered earlier this year due to low demand. Instead, the company is now prioritizing high-speed, wholesale cross-border settlement services between fiat currencies and stablecoins, leveraging its relationship with Standard Chartered to cater to institutional clients.

However, the acquisition also raises questions about the future of Elwood Technologies, particularly in light of Howard’s recent decision to sell personal stakes in various crypto companies to reinvest in Brevan Howard Digital, the crypto-focused arm of his hedge fund.

Elwood Capital is part of Elwood Technologies, a broader crypto-focused venture founded by Howard in 2018. Despite securing $70 million in funding from investors, including Goldman Sachs and Dawn Capital, in 2022, Elwood Technologies reported a $16.9 million loss for the fiscal year ending March 2023.

Meanwhile, Zodia Markets, a joint venture between Standard Chartered’s venture capital arm and Hong Kong’s BC Technology Group, launched its crypto exchange in mid-2022, amid a prolonged crypto market downturn.

Elsewhere, Standard Chartered’s Zodia Custody, a separate entity from Zodia Markets, has announced a partnership with crypto lending firm Maple Finance. According to a July 9 statement, the partnership will enable Maple Finance to utilize Zodia Custody as a custodian for collateral assets pledged on its platform.