Algoz taps Zodia Custody to trade collateral without direct asset control

Standard Chartered-backed crypto custodian Zodia Custody has collaborated with trading firm Algoz to mitigate counterparty risks that caused market turbulence in 2022.

Zodia Custody, a crypto custodian backed by Standard Chartered, has announced a partnership agreement with Algoz, a quantitative trading firm, to address counterparty risks that contributed to significant market disruptions in 2022. The collaboration aims to enhance liquidity and operational security in the crypto space, helping mitigate risks that previously led to the downfall of major crypto firms, according to a press release shared with crypto.news.

Under the new partnership, Algoz clients will be able to store their crypto in Zodia Custody’s segregated cold storage solutions. This approach minimizes the risks of asset freezes or losses, a crucial safeguard in an industry still reeling from the collapses of firms like Celsius, FTX, and BlockFi, among others.

The custodian notes that, in contrast to standard custody services, funds held in its wallets can be withdrawn “without a lock-in period.” Institutions will benefit from the full transparency afforded by blockchain, making “all wallets viewable at any time.”

“By leveraging our off-venue settlement solution, Interchange, and Algoz’s Quant Pro, we give institutions greater efficiency and better security in trading digital assets that simply cannot be found elsewhere,” Zodia Custody CEO Julian Sawyer said.

The collaboration is part of a broader industry trend towards indirect crypto exposure, following the high-profile bankruptcies that left many investors locked out of their funds. For Zodia Custody, this is not the first collaboration of this kind, as it previously teamed up with the Deribit crypto exchange to offer institutional clients access to derivatives market liquidity while keeping their assets securely in segregated cold wallets.

The latest move reflects a growing recognition within the crypto sector of the need for robust risk management solutions. Other players in the industry, such as Fireblocks, have similarly rolled out new offerings to empower startups with blockchain-based tools, including non-custodial key management systems that provide users with direct control over their digital assets.