Crypto On LYO: The Blend —SC, SBI Holdings Launch $100M Crypto Startup Investment Firm; EU Banking Body Seeks Input on Stablecoin Regulations; HSBC Launches Tokenized Securities Custody for Institutions

What happened in the crypto world in the last week? Let’s see some interesting news together!

Standard Chartered, SBI Holdings Launch $100M Crypto Startup Investment Firm

Standard Chartered’s venture arm, SC Ventures, is teaming up with SBI Holdings to launch a robust investment company with a substantial backing of $100 million, specifically aimed at fueling growth in the crypto startup sector.

The collaborative effort, known as SC Ventures and SBI Holdings’ Digital Asset Joint Venture, will be headquartered in the UAE, focusing its investments on market infrastructure, risk and compliance, decentralized finance (DeFi), and tokenization.

This strategic move to establish the investment company in the UAE is driven by the region’s mature regulatory structure, offering a more advanced and stable environment compared to other jurisdictions.

Standard Chartered, aligning with this shift, is directing its crypto activities to the UAE, planning to initiate the safeguarding of digital assets for institutional clients in the first quarter of 2024, with Dubai chosen as the preferred jurisdiction.

EU Banking Body Seeks Input on Stablecoin Regulations

The European Banking Authority (EBA) is addressing the regulatory landscape for stablecoin issuers in line with the EU’s Markets in Crypto Assets (MiCA) framework. The proposed rules, released as part of the third MiCA policy wave, emphasize liquidity and capital requirements for stablecoins within the EU.

MiCA sets stringent guidelines, including strict reserve mandates and limitations on foreign currency-denominated stablecoins circulating in the region.

Of particular note, the EBA consultations highlight the heightened supervision of “significant” stablecoins, requiring them to maintain an “own funds” reserve equivalent to 3% instead of the standard 2%.

The guidelines also cover essential aspects such as stress testing for major stablecoin issuers and criteria for determining custodians of reserve assets, trading platforms, and service providers.

The EBA plans to gather feedback on the proposals until February 8, 2024, with a public hearing scheduled for January 30, reflecting a proactive approach to regulatory evolution in the crypto sector.

HSBC Launches Tokenized Securities Custody for Institutions

HSBC, a global banking giant, has announced plans to launch a digital assets custody service for institutional clients, focusing on tokenized securities. In collaboration with Swiss crypto safekeeping specialist Metaco, the service is set to go live in 2024.

This initiative will complement HSBC Orion, the bank’s London-based platform for issuing digital assets, and a recent offering for tokenized physical gold. The combined platforms aim to provide a comprehensive digital asset solution for institutional clients.

The move comes as banks and financial institutions increasingly explore tokenization, bringing real-world assets onto blockchains. Regulators in Singapore, Japan, the U.K., and Switzerland have expressed interest in testing tokenization for various financial products.

HSBC clarified that its custody plans specifically involve tokenized securities issued on third-party platforms, excluding custody services for cryptocurrencies or stablecoins. In September, HSBC announced a collaboration with custody technology firm Fireblocks as part of the bank’s innovation efforts.

According to Metaco’s CEO and founder, Adrien Treccani, the collaboration aims to deliver a robust digital asset custody platform to financial institutions.

John O’Neill, Global Head of Digital Assets Strategy, Markets, and Securities Services at HSBC, emphasized that the new custody service aligns with the bank’s commitment to advancing digital asset markets.

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