Standard Chartered enters crypto brokerage! SC Ventures avoids 1250% capital penalty. Standard Chartered is establishing a crypto brokerage business targeting hedge funds and asset management firms, under SC Ventures, to circumvent Basel's 1250% risk weight. They have invested in Zodia Custody and Markets, and in July became the first systemic bank to offer institutional spot trading. JPMorgan Chase and Morgan Stanley are entering the space simultaneously, with US crypto ETFs managing $140 billion. The regulatory arbitrage and 1250% capital penalty for SC Ventures are based on Basel III agreements established in 2022, which require banks to apply a 1250% risk weight to "unpermissioned" crypto assets like Bitcoin and Ethereum held on their balance sheets. This is much higher than the 400% risk weight for some venture capital projects. Setting this outside the bank's main division may be the only way for this business to come to fruition. What is the actual significance of the 1250% risk weight? It means that for every $100 of Bitcoin held by a bank, they must set aside $125.