Zodia Custody, a crypto asset servicing subsidiary of Standard Chartered, has said there is a “real opportunity” for Ireland to become a European hub for the industry over the coming years as the EU moves to implement new rules for the sector.
In partnership with blockchain infrastructure company Blockdaemon, the company, which currently employs 10 people in Dublin, is launching a new staking service for institutional investors interested in crypto.
Crypto staking is a way for investors to earn passive income or rewards from so-called “proof-of-stake” assets by locking them for a period time on the blockchain, the decentralised network that logs transactions in a particular asset. Companies like Coinbase have in recent years established “staking as a service” businesses as a way to tap investor interest.
Regulators, particularly in the US where the Securities and Exchange Commission announced a legal action against Coinbase on Tuesday, have taken a more jaundiced view of the practice. Having already forced the closure of crypto exchange Kraken’s staking business, federal authorities have now accused Coinbase of offering unregistered securities in the form of its staking programme.
The Central Bank of Ireland, which authorised Zodia Custody Ireland under the virtual asset service provider regime last year, has issued several warnings in recent years about the risks associated with investing in volatile digital assets.
Zodia, which is also backed by Northern Trust and SBI Holdings, said its partnership with Blockdaemon will allow it to offer staking services to institutional clients in Europe and abroad.
Although institutional exposure to crypto in Ireland is understood to be low, interest is growing across Europe, said John Cronin, chief executive of Zodia Custody Ireland.
“More and more, institutions are holding proof-of-stake digital assets as they are often seen as the most ‘institution-friendly’ of all digital asset types,” he said. Mr Cronin said the partnership, dubbed “Staking 2.0″, is a model that “provides greater assurances for institutions through seamless security measures, full automation and price transparency”.
Mr Cronin said that Zodia’s intention is for Dublin to become its European hub once the EU’s Markets in Crypto Assets (MiCA) regulations – the world’s first comprehensive legal framework for the sector – are fully implemented over the next two years.
“There is a real opportunity for Ireland to become a MiCA hub for the industry and to further grow an already vibrant ecosystem that dovetails with existing expertise in fintech and investment management,” he said. “The combination of these elements – along with many firms in the digital asset space already operating in Ireland including ourselves and our staking partner Blockdaemon – creates a very compelling proposition.”
Mr Cronin said that staking is “how we are continuing to evolve our offering to our clients” and that as its client base grows “so too will our Irish operations”.