After Standard Chartered Bank in the UAE opened spot trading of Bitcoin and Ethereum to qualified institutions, the market began to pay attention to whether traditional banks are entering the crypto business more deeply. Industry insiders believe that what is truly worth observing is not the addition of a BTC or ETH code to the trading interface, but whether the banks have incorporated Bitcoin into their custody, credit, and collateral systems.
Standard Chartered integrates with existing trading channels
Standard Chartered stated on September 3 that qualified institutional clients can trade deliverable BTC / USD and ETH / USD through its branch in the Dubai International Financial Centre. The relevant services are provided through the bank's existing electronic channels, with some interfaces being consistent with those of the foreign exchange trading system.
Customers have the option to complete asset settlement on Standard Chartered's UAE custody platform, or they may use other custodian institutions as well. Previously, Standard Chartered had launched a similar model in the UK and has been conducting regulated digital asset custody services in the UAE.
Three signals are more important than trading volume.
According to the interviewees, putting digital assets into a familiar bank interface only lowers part of the operational barriers. For corporate finance departments, what is more critical are the counterparty, risk approval, custody standards, and whether the transactions can be integrated into the accounting and back-office systems.
- Bitcoin custody balances held by banks for non-encrypted customers
- Do banks provide credit limits for spot purchases?
- Do banks accept Bitcoin as collateral for loans?
He believes that the volume of spot transactions alone does not indicate whether institutions are willing to hold digital assets in the long term. It is only when traditional companies, funds, or other institutions place Bitcoin in the custody of regulated banks that it can be considered as part of their regular asset allocation.
If customers can complete spot transactions through their bank credit limits without having to deposit funds into the trading venue in advance, it indicates that the bank's risk control department has already assessed such assets and set risk limits for them. If the bank further makes public the mortgage discount rates, it means they have begun to price these assets and manage the associated risks.
Mortgage and settlement processes are still to be established.
Reports mention that some banks in the United States have begun to move in this direction. A report on JPMorgan Chase's mortgage arrangements in August indicated that the discount rate for Bitcoin mortgages was around 30% to 50%, meaning a collateral of BTC worth one million US dollars could correspond to a loan amount of 500,000 to 700,000 US dollars.
However, accepting Bitcoin as collateral also carries liquidation risks. If the price drops rapidly, it may trigger additional margin calls and forced sales. Therefore, banks need to establish processes for valuation, custody, collateral monitoring, and disposal before they can incorporate BTC into their lending systems.
In the settlement process, if the transaction execution and asset custody are carried out by different institutions, this can also lead to settlement risks. Interviewees pointed out that the final settlement on the Bitcoin blockchain can usually be completed relatively quickly, but the transfer of US dollars is still affected by SWIFT, bank operating hours, and payment deadlines. The slower side of the process often involves fiat currencies.
Additional information:It is also mentioned in the text that tokenizing bank deposits or regulated stablecoins could allow the cash side and the digital assets side to operate on more compatible systems, thereby facilitating synchronous settlement in a 'payment-for-payment' manner.
