By creating separate crypto companies, Standard Chartered and other finance groups are betting fund managers will prefer trusted brands to opaque crypto firms
Nikou Asgari / Financial Times :
Context & Ripple Effects
Banks spent years circling crypto without committing: after downplaying cryptocurrencies in their early years, institutions began experimenting and lobbying regulators even before the 2022 crash, when BlackRock, Abrdn, and Charles Schwab leaned into digital assets anyway. The new move is structural rather than experimental — Standard Chartered and peers are building separately-branded crypto companies so fund managers get a familiar counterparty instead of an opaque native firm.
The timing matters because demand-side pressure is real: institutional buyers now want crypto traded with brokers, segregated custody, and exchange-independent settlement (the traditional-finance structure), while Hong Kong's regulator has openly pushed back, with the HKMA questioning HSBC and Standard Chartered on why they were not accepting crypto clients.
First-order effects
- Fund managers evaluating crypto exposure now face a two-tier market: brand-backed subsidiaries like Standard Chartered's versus crypto-native firms whose governance gaps — FTX investors held no board seats across $1.8B+ raised — became visible only after collapse.
- US banks retreating from crypto companies during the crackdown hand those client relationships to smaller regional US lenders and Swiss, Asian, and UK firms, precisely the gap the new bank subsidiaries can contest.
Second-order effects
- Crypto-native exchanges and lenders must either adopt the intermediated, custody-separated structure institutional buyers now demand or cede the institutional tier to bank brands with balance-sheet credibility.
- Regulators gain leverage from the split: Hong Kong's push to become a crypto hub works only if licensed incumbents participate, giving the HKMA more room to keep pressing HSBC and Standard Chartered on client acceptance.
Third-order effects
- If trusted-brand subsidiaries win the institutional flow, crypto finance bifurcates into a regulated, bank-distributed layer and a thinner speculative periphery — closing much of what separates the industry from traditional asset servicing.
- Bank lobbying for rules that deny crypto lenders 'unfair' advantages points toward a framework where incumbent compliance costs become the moat, structurally favoring diversified groups over standalone crypto firms.
The trend: Traditional finance is re-entering crypto not by acquiring natives but by building separately-branded subsidiaries, letting regulation and post-FTX trust preferences redraw who serves institutional digital-asset demand.