Key Insights:
- Absa backs crypto regulation in institutional custody of top cryptocurrencies like Bitcoin.
- South Africa’s crypto custody market reached R25.3 billion by end of 2024.
- SEC Proposed Custody Rules Permitting Limited Crypto Self-Custody and State Trust Companies.
Absa has obtained approval for digital asset custody services under South Africa’s growing crypto regulatory framework. The Johannesburg-based bank now offers institutional clients digital asset safekeeping, administration, and transfer services. Its initial clients include asset managers, non-bank financial institutions, and corporations.
Meanwhile, the service currently supports Bitcoin, XRP Ledger, Ethereum, and USDC. The launch makes Absa the first bank on the African continent to offer digital asset custody. The bank is entering a South African custody market estimated at $1.5 billion.
Absa Expands Custody Services Under New Crypto Regulation
Absa’s new custody service focuses initially on institutional clients based in South Africa. The bank received regulatory approval before launching the offering for eligible clients. Its services cover the safekeeping, administration, and transfer of digital assets.
Meanwhile, Absa plans to extend the service to other South African client groups. The bank also intends to introduce custody services across additional African markets.
The bank currently supports four digital assets through its custody infrastructure. These include Bitcoin, XRP Ledger, Ethereum, and USDC. Absa also plans to add other assets as client demand develops.
Bitcoin currently represents the predominant asset held through the custody service. However, Absa continues to work with clients seeking custody of additional crypto assets. The bank has not provided a specific timeline for adding those assets.
South Africa’s custody market has also grown alongside institutional digital asset activity. The South African Reserve Bank tracks assets held by licensed service providers. Its data showed custody holdings reached R25.3 billion by the end of 2024. That amount represented approximately $1.5 billion.
Crypto Regulations Drive New Custody Frameworks
Absa’s launch follows new developments in U.S. crypto regulations. The Securities and Exchange Commission recently proposed rules covering crypto custody. The proposal addresses registered investment advisers and regulated funds holding crypto assets.
Under the proposed framework, state trust companies could also provide custody services for client and fund holdings. The SEC also proposed changes to financial statement audits.
The proposed rules would update custody requirements under the Investment Advisers Act of 1940. They would also amend requirements under the Investment Company Act of 1940. The SEC said the changes would address custody arrangements involving digital assets.
SEC Chairman Paul Atkins said existing rules had not kept pace with digital asset growth. The proposal would establish a framework for advisers and funds handling crypto assets.
However, the SEC proposal remains subject to the regulatory process. It therefore differs from Absa’s existing custody service, which already received South African regulatory approval.
Absa and USDC Join Broader Institutional Custody Growth
Institutional crypto custody has also developed in Hong Kong through Standard Chartered. In May, the bank announced support for SOLOWIN HOLDINGS in an institutional crypto custody arrangement.
The arrangement marked the first institutional crypto custody service in Hong Kong offered by a global systemically important bank. Standard Chartered also worked with regulators and market infrastructure providers during the process.
The bank’s work included operational, custody, and governance requirements for the Hong Kong market. Standard Chartered and AXG also progressed efforts to align custody standards with regulatory expectations.
Meanwhile, Absa’s service adds another bank-led custody offering to the institutional digital asset market. Its current assets include Bitcoin, Ethereum, XRP Ledger, and USDC.
The bank plans to expand its supported assets as it works with institutional clients. It also plans to extend the service across other African markets. However, each expansion remains subject to the required regulatory approvals.
This article is for informational purposes only and does not constitute financial, legal, regulatory, or investment advice. Cryptocurrency custody rules vary by jurisdiction and may change as regulators update their frameworks.
