Own NAB shares? The bank just made an important crypto investment

NAB just increased its crypto exposure.

| More on:
A woman works on her desktop and tablet, having a win with crypto.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

National Australia Bank Ltd (ASX: NAB) shares may get a boost from a recent cryptocurrency investment if it can better serve institutional investors. The ASX bank share has just bought a stake in a business called Zodia Custody.

Being able to provide a full service to institutions is important because a lot of NAB's earnings come from its business clients.

In the FY24 half-year result, the business generated $1.67 billion of cash earnings in the business and private banking, $899 million from corporate and institutional banking, while just $553 million came from personal banking and NZ$750 million from New Zealand banking. Being able to provide everything that clients want can help win and retain institutions.

NAB's crypto industry investment

According to reporting by the Australian Financial Review, NAB has bought a stake in Zodia Custody, which is part of the bank's cryptocurrency strategy to safeguard digital assets held by institutional investors rather than launch its own stablecoin.

Zodia Custody is a competitor to Coinbase and has other major investors, including UK bank Standard Chartered, US custody giant Northern Trust and Japanese lender SBI Holdings.

The AFR reported that clients will be able to hold cryptocurrencies such as bitcoin and ether, as well as tokenised real-world assets, including commodities or property.

How much was invested? NAB and Zodia did not want to reveal the size of the investment or the valuation of Zodia Custody, according to the newspaper.

This is not an exclusive arrangement between NAB and the cryptocurrency holding business – Zodia will look to serve a wide array of investors, which includes other banks. NAB is hoping this partnership will put it ahead of the 'regulatory curve' and lead to partnerships that could link NAB institutional customers to Zodia. Zodia is also applying for a licence in Japan.

What's so special about Zodia?

The AFR reported that Australian cryptocurrency laws could lead to requirements that crypto assets are separated from the internet, stored on hard drives and stored in physical bank vaults – this is called cold storage.

The Zodia technology was reportedly originally developed by the UK military which allows communication from a cold storage vault to the internet, but doesn't allow communications to flow back, enabling offline assets to be traded at close to real-time.

 The AFR reported NAB Ventures managing director Amanda Angelini explained the bank aimed to focus on providing simple, safe and secure services:

This is particularly important in newer fields where technology continues to evolve quickly.

NAB Venture's investment in Zodia was based on their innovative approach, institution-grade safety and strong work with regulators.

NAB share price snapshot

Since the start of 2024, the NAB share price has climbed more than 16%, as shown on the chart below, while the S&P/ASX 200 Index (ASX: XJO) has only risen around 2%.

Created with Highcharts 11.4.3National Australia Bank PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin, Coinbase Global, and Ethereum. The Motley Fool Australia has positions in and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Bank Shares

CBA shares are now worth a total of more than $300 billion. Here's why that's a problem

CBA’s ever growing stock market dominance is raising red flags. But why?

Read more »

An excited man stretches his arms out above his head as he reaches a mountain peak.
Record Highs

Breaking: CBA shares hit a new record of $180

CBA shares can't possibly keep rising can they?

Read more »

A small child in a judo outfit with a green belt strikes a martial arts pose with his hand thrust forward.
Bank Shares

Forget the big 4 banks, Macquarie tips 11% upside for this ASX All Ords Financials stock

This broker is telling investors to look beyond CBA.

Read more »

View of a business man's hand passing a $100 note to another with a bank in the background.
Bank Shares

What price should I pay for the Big 4 banks?

Macquarie has updated its target price on Australia’s Big 4 banks.

Read more »

Bank building with word Bank on it.
Bank Shares

What happened with the big four ASX 200 bank stocks in May?

Guess which ASX 200 bank stock led the charge higher again in May.

Read more »

An ASX investor in a business shirt and tie looks at his computer screen and scratches his head with one hand wondering if he should buy ASX shares yet
Bank Shares

After the recent RBA rate cut, why is Macquarie underweight ASX bank shares?

Macquarie is not banking on strong returns from this sector.

Read more »

Business people discussing project on digital tablet.
Bank Shares

CBA vs Macquarie shares: Which one is best?

Ord Minnett has given its verdict on these giants.

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Bank Shares

How the CBA share price smashed the benchmark to close May at all-time highs

I hope you didn’t sell your CBA shares in April!

Read more »