TradFi Builds Crypto Infrastructure, Redefining Global Finance

Traditional financial institutions are accelerating their integration into the cryptocurrency sector, with 21Shares selecting Standard Chartered as its digital asset custodian—a move that underscores the growing influence of TradFi in crypto infrastructure. The Swiss asset manager, which previously partnered with Standard Chartered's crypto-native subsidiary Zodia Custody, now appears to be consolidating custody operations under the bank's broader framework. Standard Chartered's global head of financing and securities services, Margaret Harwood-Jones, emphasized the collaboration as an opportunity to "extend our expertise into the fast-evolving digital asset ecosystem," highlighting the bank's expanding role in custody services.

21Shares, which offers exchange-traded crypto products, cited Standard Chartered's reputation in cross-border banking and risk management as key advantages. Mandy Chiu, the firm's global head of product development, described the partnership as a "milestone" in delivering institutional-grade infrastructure to digital assets. The shift comes amid a broader trend of traditional banks entering the crypto space. In September, US Bancorp relaunched its digital asset custody services for investment managers according to reports, while Citi recently partnered with Coinbase to streamline digital asset payments for institutional clients. The Wall Street giant aims to enhance fiat on/off-ramps and payment orchestration, with future plans to explore 24/7 fiat-to-stablecoin transactions.

The move raises questions about Zodia Custody's future role. As a wholly owned subsidiary of Standard Chartered since 2020, Zodia had previously served 21Shares, suggesting the bank initially sought to insulate itself from direct crypto exposure. However, Standard Chartered's recent launch of a Luxembourg-based digital asset custody service and a mid-July trading platform for institutions indicates a strategic pivot toward deeper involvement.

Parallel developments highlight the sector's maturation. Paxos, a regulated fintech, has acquired Fordefi, a custody and security platform for on-chain operations, to bolster infrastructure for the "on-chain economy." Fordefi's multi-party computation (MPC) wallet technology enables secure digital asset management across centralized and decentralized workflows, with clients including PayPal and Mastercard. Meanwhile, Japan is proposing stricter reserve rules for crypto exchanges to mitigate risks from high-profile hacks, such as Bybit's $1.46 billion breach in February 2025. The regulatory framework would align Japan's safeguards with those in the EU and Hong Kong, requiring capital reserves and insurance for customer assets.

Investment trends further reflect the sector's evolution. Crypto venture capital funding surged to $4.65 billion in Q3 2025, the second-highest figure since the FTX collapse. While interest in NFTs and Web3 gaming has waned, early-stage firms launched in 2024 accounted for a significant share of deals, signaling persistent innovation. Institutional allocators are increasingly favoring liquid, regulated products like spot Bitcoin ETPs over speculative bets, as higher interest rates and AI competition reshape capital allocation priorities.

As traditional banks and regulators refine their approaches, the crypto industry faces a critical juncture. With Standard Chartered, Citi, and others embedding digital assets into core services, the lines between TradFi and crypto continue to blur—a shift that could redefine global financial infrastructure.