Standard Chartered’s Zodia Markets Eyes Acquisition of Alan Howard-Backed Elwood Capital

Standard Chartered’s cryptocurrency subsidiary, Zodia Markets Ltd., is reportedly in advanced talks to acquire Elwood Capital Management Ltd., a digital asset firm backed by billionaire hedge fund manager Alan Howard. This strategic move signals Standard Chartered’s deepening push into the crypto space and could reshape its digital asset offerings.

According to sources familiar with the matter, the deal is expected to close this month, though financial terms remain undisclosed. The acquisition would provide Zodia Markets with valuable licenses as a virtual asset service provider and investment business in Jersey, supporting the company’s recent pivot towards over-the-counter (OTC) settlement services.

Elwood Capital, part of Howard’s Elwood Technologies established in 2018, offers OTC trading and settlement services for digital assets. The firm raised $70 million from investors including Goldman Sachs in 2022 but reported a loss of $16.9 million for the fiscal year ended March 2023.

This potential acquisition comes as Zodia Markets refocuses its strategy. The firm recently shuttered its crypto exchange platform due to lack of demand and is now concentrating on leveraging its relationship with Standard Chartered to provide high-speed, wholesale cross-border settlement services between fiat currencies and stablecoins. Zodia’s CEO, Usman Ahmad, reported that the company’s OTC settlement operations now handle “comfortably in excess of $50-$60 million a day.”

The move aligns with Standard Chartered’s broader crypto ambitions. The bank recently announced plans to set up a trading desk for Bitcoin and Ether, positioning itself as one of the first global banking institutions to engage in spot trading of cryptocurrencies.

For Alan Howard, this deal could be part of a wider strategy to consolidate his crypto investments. The Brevan Howard Asset Management co-founder recently put several of his personal stakes in crypto companies up for sale, with plans to reinvest proceeds into Brevan Howard Digital, the crypto-focused arm of his asset management firm.

As the cryptocurrency market continues to evolve, this potential acquisition underscores the growing interest of traditional financial institutions in digital assets. It also highlights the trend of consolidation and strategic partnerships in the crypto industry as companies seek to enhance their capabilities and market position.

The deal, if completed, would mark another significant step in the convergence of traditional finance and the crypto sector, potentially setting the stage for further institutional adoption of digital assets.