LMAX Digital partners with Zodia Custody to provide institutional-grade trading infrastructure and custody solution for CoinShares

May 17, 2023 - Zodia Custody, the institution-first digital asset custodian backed by Standard Chartered in partnership with Northern Trust, has announced a collaboration with LMAX Digital, the regulated institutional cryptocurrency exchange operated by LMAX Group. The collaboration aims to provide institutional-grade trading infrastructure and custody services to CoinShares, the leading Alternative Asset Manager in Europe specialising in digital assets.

This partnership shows that market demand for separating exchange execution from custody, clearing, and settlement functions has surged. Investors are increasingly focused on reducing concentration risk and implementing robust security measures to safeguard their assets effectively.

CoinShares will leverage Zodia Custody's market-leading off-exchange settlement solution, Interchange, which offers a fully segregated custodian solution. Additionally, CoinShares will gain access to LMAX Digital, a regulated exchange venue known for its top-tier security, compliance, KYC, and anti-money laundering policies. Zodia's Interchange solution ensures independent and effective safeguarding of digital assets while mitigating counterparty risk exposure for CoinShares. This arrangement allows CoinShares to maintain full control over its assets and have complete protection through settlement obligations.

The pace of tokenisation and the increasing convergence of digital assets with traditional capital markets have fuelled the demand for regulated trading infrastructure and efficient price discovery. LMAX Digital, as a leading institutional spot cryptocurrency exchange and primary price discovery venue, fulfils these requirements for global market participants.

Jean-Marie Mognetti, CEO of CoinShares

Jean-Marie Mognetti, CEO of CoinShares, commented, “CoinShares’ DNA promotes enhanced security and transparency through collaboration with regulated market players. This joint effort with Zodia Custody and LMAX Digital is aligned with our long-term strategy. We are committed to shape a reference standard for digital asset management. This underscores the importance of our duty of care for our stakeholders. We are expecting the rest of the industry to follow through.”

As Europe's premier Alternative Asset Manager specializing in digital assets, CoinShares aims to provide all investors with access to a trusted, registered, and best-in-class product suite. By implementing Interchange through this collaboration, CoinShares reinforces its advocacy for stronger digital asset regulation, including products that adhere to existing regulations and regulatory best practices in traditional financial markets.

Julian Sawyer, CEO of Zodia Custody

Julian Sawyer, CEO of Zodia Custody, said, “The digital asset market needs to evolve. Investors are demanding greater assurance and rigour across the entire ecosystem. Interchange is our answer to how we can help the market respond to those concerns. We have listened to the needs of institutional investors and have delivered a solution that combines digital asset-native technology with bank-level compliance and governance. Our collaboration with LMAX Digital and CoinShares is indicative of how the digital asset ecosystem can mature – namely, through collaboration to develop an infrastructure that is fit for purpose.”

Jenna Wright, Managing Director of LMAX Digital

Jenna Wright, Managing Director of LMAX Digital, commented on the collaboration, “In the wake of recent industry events, the segregation of crypto market services and effective corporate governance and controls is more important for institutions than ever. By bringing together our regulated exchange infrastructure with the regulated custodial services of Zodia Custody, we are able to offer a robust, institutional-grade solution that benefits clients such as CoinShares, whilst building a better market structure for all participants in the digital assets ecosystem. At LMAX Digital we are determined to remain at the very forefront of innovation and technological development to serve the rapidly evolving needs of our institutional clients”.

This collaboration with LMAX Digital and CoinShares marks the beginning of a period of growth for Zodia Custody's Interchange product. Zodia Custody is actively working with several key strategic partners to implement Interchange, responding to the industry's move toward maturing digital asset infrastructure, embraced by both institutions and exchanges alike.