Dissolution of the SBI Holdings and Zodia Custody Joint Venture in Japan
Zodia Custody, the institutional digital asset custodian backed by Standard Chartered, and Japanese financial giant SBI Holdings have mutually agreed to terminate their much-anticipated joint venture, "SBI Zodia Custody," nearly two years after its inception. The venture, which aimed to provide bank-grade crypto-asset custody for institutions in Japan, was dissolved before it could secure regulatory approval or commence formal operations.
The dissolution was framed by both parties as a strategic realignment. In a statement, Zodia Custody CEO Julian Sawyer described the move as a "mutual strategic decision aligned with SBI Holdings' priorities in the region," adding that both firms "have other priorities." Echoing this sentiment, a spokesperson for SBI Holdings characterized the decision not as a retreat but as a "proactive decision aimed at pursuing group-wide synergies with greater speed under our digital ecosystem."
The joint venture, structured with SBI holding a 51% majority stake, was announced in early 2023 with the goal of becoming Japan's first tier-one institutional crypto custodian. However, the entity never progressed to submitting a formal application for local registration with Japan's Financial Services Agency (FSA). According to Sawyer, the venture had been "working and preparing for an application," but the decision to dissolve was made before any regulatory filing. This lack of progress highlights the notoriously stringent and "risk-averse" regulatory climate in Japan, a landscape heavily shaped by the legacy of past industry scandals, including the collapse of Tokyo-based exchange Mt. Gox and the more recent $300 million breach at DMM Bitcoin in 2024.
Despite the venture's closure, SBI Holdings has emphatically stated it is not stepping back from the digital asset space. On the contrary, the Japanese conglomerate is reportedly exploring a new framework for custody services through its own internal entities, including Shinsei Trust & Banking and SBI Clearing Trust. This move suggests a strategic pivot towards building a comprehensive, vertically integrated digital financial ecosystem under its direct control, rather than relying on external partnerships for core infrastructure.
Simultaneously, Zodia Custody is accelerating its global expansion, signaling a clear reallocation of resources to more welcoming regulatory environments. The firm recently acquired Tungsten Custody Solutions in the United Arab Emirates and has successfully launched operations in other key Asia-Pacific markets, including Singapore, Hong Kong, and Australia.Sawyer noted that the firm has "a finite amount of resources available globally," reinforcing the view that the decision was driven by a pragmatic assessment of opportunity cost.
The end of the SBI Zodia Custody partnership serves as a potent case study on the formidable challenges facing international firms in Japan's digital asset sector. The event illustrates how the friction of a cautious regulatory environment, combined with the evolving strategic priorities of a dominant domestic player, can reshape the competitive landscape, reinforcing the formidable position of local incumbents.
