Navigating the Future of Digital Asset Custody with Julian Sawyer

I'm joined today by Julian Sawyer, the CEO of Zodia Custody.

Julian, welcome to the show today.

Thank you.

Well, kick it off.

Tell us a little bit about Zoia Custody and what are you guys up to?

So we were founded, uh, 6 years ago by Standard Charterd Ventures, uh, on the belief of two things.

One is the future's blockchain, and secondly, it all begins with custody.

So what we do is digit asset custody, um, and that is for crypto, for stable coins, and then tokenization of real world assets.

We do it in Europe, the Middle East, and also in Asia.

So absolutely love that from many levels, but when we talk about mass adoption and the movement, particularly institutionally custody globally seems to have been a barrier.

We come across, uh, everything from regulation to true governance.

When we look at this, give us a little bit of the difference between the two and where you see governance taking its role, particularly with institutional adoption.

It's, it is a major.

Challenge for the industry, um, first of all, getting clarity about what custody means and, uh, as you are from America, I'll get I'll give you guys a smile the, you know, being a qualified custodian means something in America.

We don't have that in the rest of the world.

We think we should.

We think that is useful.

We think if, if you are holding clients money, which is what you are, then you need to have a certain standard.

Um, and I think that is where regulation needs to get to.

I think there are some markets where that is happening, but I think there's an education for the industry on that as to what is a custodian, what do they do?

Um, and then secondly, it's about the regulation permissions that are coming into each country.

Um, that is moving at pace, but it is also not as aligned, uh, as we would like it to be, um, and I'm sure we'll talk about uh the US in due course, but what is in.

Interesting is that alignments in Europe where we are today plus also in Asia, which I think is super important and I think that is the beginning.

I don't want to call it standardization, but when you have that level of governance where it creates the comfort to transact right we we have the kind of growth from there.

You know, I, I was reading a little bit earlier when we talked about custody partners as a risk decision, and I think that really says so much to the process because the custody partner is instrumental to the process.

So talk to us a little bit about what that means from a compliance standpoint and how do you pick your custody partner?

Well, I think a lot of people have looked at it just from a pure technology play, and while that is critical, you've then got an information security layer around that technology.

But then you've got your processes and controls required as well as the external audits that give a complete picture.

Um, and I think what is important is that clients need to understand what are the right questions to ask.

This isn't the same as picking a traditional custodian.

This isn't about picking a cloud provider.

This is about picking something which is where you are putting your digital assets and the criticality of that.

Um, and I think what we're finding is that a number of clients have picked a solution over the last 5 or 10 years, um, that has been adequate.

New regulation, new standards, new expectations have come in, which I think is raising the bar, and I think that again is a really important part for our industry.

So that being essential for the industry and then you have this global climate where jurisdictionally regulation is different we we touched a little bit uh on the US a sec a second ago as we have some regulatory changes, administration change, where does this impact compliance and how do you approach it?

It's a very good, a very good question and uh I was helping you know the answer because I don't I don't know, I don't know the full answer.

I think what you've got to think about is where you're looking global and where you are looking global and how to get that right.

So we have, uh, you know, chief compliance officers in all, all our offices, all of our jurisdictions, and there's local nuances.

But I think we've had a debate over the last 234 years about what a security is.

And just getting consistent understanding of that helps to uh to determine what what to do.

We've had recent clarity from the US about staking, super helpful.

Um, and I think as an industry, what we are wanting is, uh, a roadmap, is clarity and alignment, and I think unlike probably most other financial services products, we're 24/7 and we're.

Global.

So you could purchase or you could create a uh a tokenized asset here in Holland, but you want to sell it in America or in Singapore.

How do you do that?

And just getting that alignment is a challenge.

So there is a journey, there's a journey that we need to embrace as an industry.

This isn't about just um having a go at the regulators, trade bodies have a role to. and the ecosystems and governance and as as you kind of indicated, new administrations in the White House and other parts of the world also have a huge part to play in where this is going.

What we want as an industry is a road map is clarity so we can invest and we can help our clients invest in this asset class.

I just want to pull on that thread quickly.

So it's not that the industry doesn't want regulation, doesn't want. doesn't want the.

Just tell him, tell us what it is so that we can build the road back to comply.

Yeah.

I think that I think that's absolutely right.

I mean, I think crypto has had a history of trying to, you know, be against the regulatory framework and against the banks and things like that.

That's not a model that we subscribe to.

It's not a model that a lot of our clients subscribe to.

Um, and I think this is a maturity thing.

We're moving from, you know, innovation.

Uh, and early adopters to the mass market, we're seeing a huge amount of institutional interest around the world and BlackRock being a very good example of that.

Um, and that needs to have certain standards that needs to have some expectations.

So we're raising the bar as an industry, as zodia, we're trying to all raise the bar to make sure that we are protecting clients' assets.

Wonderful.

Julie, as we close out here briefly, uh, I, I see a tungsten custody Solutions in the UAE, uh, Zodiac Custody's intention to acquire that.

Talk to us a little bit about the acquisition and maybe some of your broader strategy.

Yeah.

Tungsten is a uh a homegrown, uh, within Abu Dhabi, uh, crypto custodian, uh, with sovereign wealth funding.

Uh, we have just entered into that market ourselves and realized that we like the team there, we like the investors, we like what they've done.

Um, and putting us together created the real opportunities to provide our services to their clients and their capabilities and to our stack.

So for us, uh, that it's been a really, uh, joyful experience in terms of, of, of merging the two businesses.

But I think if we look at this at a macro level, then what we're seeing is consolidation.

We are going to see more of, of this, and it goes back to some of the themes we've talked about, you know, regulation has a has an expectation that you have to comply against and what does that mean?

And there's a, there's a cost associated to that.

What do clients want a global product of a global custodian.

So we are seeing a whole consolidation program going on and we want to be part of that.

Terrific.

Well done Julian, thank you very much, thank you.