Bitfinex Forges Strategic Partnership with Zodia Custody
Cryptocurrency exchange Bitfinex has formed a strategic partnership with digital assets custodian Zodia Custody to fortify the security of its institutional clients’ assets.
The deal struck with Zodia Custody, a subsidiary of the UK multinational banking titan Standard Chartered, aligns with a growing trend within the digital assets sector, one that emphasizes separating asset custody from trading activities. Such a division will result in heightened security measures while better meeting regulatory compliance.
Securing digital assets
This collaboration provides an opportunity for institutional clients who maintain accounts with both Bitfinex and Zodia Custody. They can now seamlessly replicate their custodial assets on Bitfinex’s cutting-edge trading platform, all while basking in the security offered by Zodia’s off-exchange settlement solution, aptly named Interchange.
With this innovation, the need for actual asset transfers becomes obsolete as the settlement process unfolds periodically on the blockchain. This approach not only ensures efficiency but also provides greater security when interacting with the platform.
Industry trend
Bitfinex’s move towards segregating trading and custodial functions aligns with best practices in the crypto industry but also signifies a wider trend observed among cryptocurrency exchanges as they increasingly adopt a more conventional approach akin to traditional financial institutions.
Paolo Ardoino, the Chief Technology Officer (CTO) of Bitfinex, shared the exchange’s perspective, stating:
“We are committed to shaping the future of digital market infrastructure and enabling institutional customers to thrive in this space. Working with Zodia Custody is a significant part of that strategy, and together we can look to enable even more institutions to enter or further participate in digital assets.”
This partnership serves as a testament to Bitfinex’s continuous efforts to collaborate with reputable custodians, building upon past successful alliances with firms like Koine in 2020 and Digivault in 2022.
The significance of segregating asset custody from trading operations has taken on greater importance, primarily in the aftermath of the collapse of FTX, where management gambled with customer’s assets.
Zodia’s market expansion
Zodia Custody, with the backing of Standard Chartered Bank, has recently expanded its footprint into Singapore, offering digital asset custody services to financial institutions in the burgeoning Asian market.
Not content with that, in May it launched its crypto custodian service in Dubai. The following month the fledgling firm announced a partnership with blockchain infrastructure firm Blockdaemon relative to crypto staking for institutional clients. There’s been no let up in the firm’s roll-out of services as earlier this month it commenced a yield offering on stablecoins in partnership with Singapore-based DeFi platform OpenEden.
Bitfinex’s history includes one of the most infamous hacks in the cryptocurrency sphere, with the pilfering of 120,000 BTC, now valued at over $3 billion. Nevertheless, the exchange has undergone a transformative journey and presently boasts an extensive array of cryptocurrencies and trading pairs.
As the regulatory landscape continues to evolve, the practice of separating custody from trading is poised to become a standard procedure, further enhancing the legitimacy and security of the cryptocurrency market.
