Standard Chartered crypto spinoff Zodia Markets gears up for Abu Dhabi expansion

Standard Chartered’s crypto spinoff Zodia Markets is gearing up to set up shop in Abu Dhabi.

Nick Philpott, COO at Zodia Markets, told DL News that the firm is looking to expand into the area and expects the legal entity to be set up “in the next two to three weeks.”

Zodia Markets was created through a partnership between Standard Chartered’s fintech ventures arm, SC Ventures, and BC Technology Group, the Asian digital asset company.

The UK cryptoasset exchange and brokerage – a sister company of Standard Chartered and Northern Trust’s crypto asset custodian firm Zodia Custody – launched last summer after it was granted approval by the UK’s Financial Conduct Authority. But Philpott said that the firm had explored going into the emirates since before the official debut.

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Zodia Markets applied for the FCA licence earlier in 2022, but after five months of waiting the leadership “started to get a bit nervous” as several companies had publicly complained about the markets watchdog taking a long time to approve applications.

“We were sitting there in the queue waiting, and we just started to look around elsewhere,” Philpott said, adding that the United Arab Emirates was the logical alternative option as “there was always the plan to go to the Middle East.”

The crypto firm aims to join the gold rush into the so-called Abu Dhabi Global Market, an international financial centre modelled on the UK legal system started in 2015 that the government hopes can help propel the UAE into a dynamic global crypto hub.

Its regulator, the Financial Services Regulatory Authority, has been courting crypto firms to set up shop there while watchdogs elsewhere step up scrutiny amid explosive industry scandals and bankruptcies.

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Philpott said the firm is currently in talks about licensing and processes to meet other regulatory requirements as well as setting up banking services to deal with things like payroll.

The company already has a presence in the UAE, with its CTO Giovanni Miano and tech team already working out of the country.

Zodia Markets will use the new entity as a launchpad to expand across the region, focusing on markets where Standard Chartered is already operating, such as Nigeria, Kenya, South Africa, Saudi Arabia, Oman, Bahrain, Qatar and Kuwait, Philpott said.

Julian Sawyer, CEO of sister firm Zodia Custody, has hinted to DL News that his firm may also expand into the Middle East, referring to the region as “really interesting, a really hot area in more ways than one.”

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The UAE has spent the past few years positioning the nation as a regional hotbed for crypto. Its initiatives include crypto-friendly regulation and the lowest corporate tax in the GCC region, barring Bahrain.

In February, Hub71, Abu Dhabi’s tech ecosystem, launched a $2 billion initiative to back web3 and blockchain technology startups in the region.

The programme included support for businesses planning to relocate to Abu Dhabi.

The strategy has proven successful, with several crypto companies eyeing Abu Dhabi and the UAE as a potential base of operation.

A previous version of this story incorrectly stated that the ADGM’s regulator is the Virtual Assets Regulatory Authority, or VARA. It is the Financial Services Regulatory Authority.