Ryan Hodges joins Amy-Rose Goodey on The House is Digital for a conversation on trust, institutional custody and the infrastructure underpinning the next phase of digital finance.
Drawing on a career across traditional banking, payments and institutional finance, Ryan shares how that experience now applies to digital assets and his work leading Zodia Custody in Australia.
The discussion explores what digital asset custody actually means, how banks are approaching wallets and digital asset infrastructure, stablecoins and cross-border payments, and why institutional-grade security is critical as traditional and digital finance converge.
Ryan also discusses Australia’s regulatory progress, the importance of education and adoption, and the risk of Australian businesses and opportunities moving offshore if we fail to keep pace globally.
A clear look at the infrastructure, regulation and trust required to bring digital assets into the financial mainstream.
speaker-0: Thank you very much. Nice to be here.
speaker-1: Today we’re gonna deep dive into trust, risk, custody, mostly around digital assets. But I would like to take a little bit of your experience from the banking industry as well as we go through some of what we’re seeing in the digital asset landscape at the moment. But before we do, can you take us through your origin story, where you started, and how you were poached by the digital asset industry?
speaker-0: Yeah, sure. Poach is a strong word, but I I’ll take that. That’s nice. Thank you. Like I think my background is traditional banking and finance. ⁓ you know, right across retail from when I was a bit younger, or much younger than I am now. Business banking corporate institutional. ⁓ I spent a lot of time in payments and liquidity and cash management. And I guess ⁓ both at two of the larger banks here in Australia, ⁓ an institutional level. when I started to research digital assets in terms of investment I saw a lot of the crossovers in terms of the solves for this, that, and the other. And I that really encouraged me to move down that channel to explore more. And so ⁓ initially that was ⁓ working in strategy one day a week with a team, you know, looking at how we could solve some of the applications and challenges we had in terms of payments at a bank. And you know, that was a long time ago now, and it was very, very early on. So a lot of the time when we would put papers up. They would get declined, or I think all of them were. ⁓ And they were for various reasons, such as you know, brand risk, concentration, demand, you know, making it stack up in terms of scalability. But I learned a lot about the industry by doing that. And so when I was looking for my next role, something was, you know, interested in I was interested in digital assets, you know, as a role. I didn’t know what that role was, but when I heard about Zodun that they were looking for someone, you know, that idea of custody and bringing that strong. Regulatory oversight into assets and to digital assets was something I was really keen to do. So I jumped at that opportunity to join Zodia.
speaker-1: And so it sounds like you ⁓ the banking industry, the TradFA industry was easily translated over to the custody side of things. How what what exactly did you take from there and apply it into custody?
speaker-0: Yeah, it’s a good question actually. So I think, you know, the the the biggest, broadest measure was, you know, I was used to working in a regulated market such as a bank or banks and, you know, that safety aspect of you know, regulatory side in Australia in terms of maintaining assets, maintaining, you know, cash and capital for clients and doing it in the right manner so that they are, you know, it’s the last thing they need to worry about. That transference to digital assets was something that I wanted personally for my digital assets. And so it was an easy thing for me. And think the my ability to engage with banks, other FIs, other institutions comes from my engagement with banks over many years. I don’t want to say the number, but many years.
speaker-1: Can you talk to us about what Zodia does and and I I know you’re gonna talk about custody, but for our listeners at home, what exactly is custody and why do you do it of digital assets?
speaker-0: Sure. So custody in its raw format is, you know, the safety of those assets. So the protection of those assets. And in a traditional world, a custodian in Australia from a Fed perspective might be a perpetual. ⁓ here in Australia, in a digital asset landscape, that’s Zodia. And so whilst that we may provide infrastructure Or let’s say services to a perpetual, an AML, et cetera. On the other side, we provide those services into banks and institutions. And the reason that we do that is right now in Australia and many other countries around the world, the digital asset landscape is quite new in terms of understanding how those assets work, how wallet infrastructure works, how the associated risks are managed. And because it’s quite new into the banking landscape, what we’re there to do is provide info. infrastructure, we’re there to help manage risk and we’re there to help educate. And I think that’s probably the most critical element is a lot of people working in in banks right now understand you know payments, liquidity, end-to-end, but they’re very new into digital assets. And so what we’re there to do is provide the infrastructure but also the education of how it works and to help guide customers along that journey.
speaker-1: We don’t traditionally see digital asset ⁓ digital assets interfacing or interacting with banks. So you talk about infrastructure. Can you elaborate a little bit on what that infrastructure is and how your digital asset infrastructure interacts with banking infrastructure?
speaker-0: Sure. So essentially it might be worth going back to where Zodia started. So Zodia started ⁓ initially because a client of Standard Chartered Banks was looking for a cust a custodian for digital assets. And when they went to market to look for that, there wasn’t anyone around. And so the concept of forming Zodiac was to fulfill that need. And so when you think about here in Australia, you know, the infrastructure that banks operate on, the regulatory system that underpins it, it’s very, very secure. It’s seen us through ⁓ the GFC, through COVID, and many other really challenging financial impacts. you know, I guess for the last ten or twenty years that we’ve seen. And so when Zodia went to build the infrastructure in terms of how do we do that for banks, we looked at those challenges in terms of a regulatory standpoint. But also if you think about how digital assets have been framed over the last ten years as very, very risky, we looked at the I think at about the seventy most prolific breaches in history for digital assets and said we need to build something that is robust to, you know, make sure that doesn’t happen again. And so We believe we build infrastructure as good as or better than bank grade, what we call institutional grade security. And the reason we do that is we want to build far in advance of what the regulatory requirements are in each of the markets that we operate in, and so that we can provide the same protection that banks provide out to their clients now. Say banks is an example of a client, and so that those clients and their clients feel safe in terms of how we manage the assets.
speaker-1: So globally, I guess, across various jurisdictions, there’s various standards, if you have the highest bar, then you’ll be able to service all the all your clients globally. I guess that’s that’s a good way to operate. But when you interact with the banks and digital assets, what is the what are the banks or any traditional financial ⁓ service ⁓ or business? What are they asking of you? What how are how are they engaging with digital assets to require that infrastructure?
speaker-0: Yeah, that’s a good question. So I think locally here in Australia, and I think we’ve sort of talked about this before, I I feel like the banks here in Australia are moving along that continuum of in of investigative work in terms of what does it mean if we provide digital asset infrastructure, you know, what let’s say wallets to our clients, how will they operate, how will we manage risk, how do we what is the impact to our bank? ⁓ because that’s the biggest thing. Moving into something like this comes with a lot of risk. And I think there’s a change. Challenge there in terms of how their infrastructure works or for what they have traditionally. And so, you know, I was having a conversation the other day with one of the banks and they said, Well, how do the accounts work for these digital assets? So, what’s different if you’ve got wallet infrastructure? They go, Well, how does what what does that actually mean? And so a lot of the time you have to bring it back to, well, how does your current UI work on a bank in terms of managing all of the account infrastructure? The same way we would do that in terms of setting up the wallet infrastructure. And so when you start to build, you know, that. what would I call it, you know, that that harmonious concept concept for accounts and wallets working together, banks start to understand, okay, so it’s not a huge stretch for us to go and add wallet infrastructure to our UI so that clients can start to see both their digital assets but also their fair counterparts. And so that’s sort of one way of breaking that down. But the other side is, you know, I think demand has to come for this requirement. At the moment we’re seeing you know demand for stable coins. to move to move money around the world where there’s you know limited liquidity. We’re seeing deposit tokens used for you know treasuries around the world where they want to operate across multi-jurisdictional. So we’re starting to see those things happen. And because of that, it means those banks need to get ahead of that and be able to offer those services.
speaker-1: Okay, so that’s so what we’re seeing is an intersection of quite a new financial technology and quite an older technology and ⁓ by ⁓ banking and financial system interact, which means the policy settings, which means the Australian government and policy makers, Treasury, ASIC, all the regulators sh are looking at how they govern. our industry and ⁓ the banking industry. What are you seeing with respect to the regulatory environment around where you’re operating?
speaker-0: Yeah, good question. So I think w again, I feel like we are heading in the right direction from a ⁓ legislation regulation perspective, obviously legislation to regulation. And I think it’s something that was, you know, people have been calling out for a while here in Australia. And I think we’re finally getting to the right premise ⁓ of that being, you know, in place and working. I think the challenge that we’ve always had in Australia is we are a very heavily regulated financial ⁓ market, which is a good thing, as I mentioned before. About what we’ve gone through. And so I think we have been a little slow off the mark to put this in place, but I think we’re doing it in the right way, is what I would say. So we’re putting the right legislation down, the right regulatory side. We’re bringing up the education levels right across the board and across multiple regulators, I should say. And I think that’s only a good thing for this market. I think the other side of it is you know, we are challenged in terms of we’re competing on a global stage, so we do need to speed up in some areas. And I think we also need, you know, a larger push in terms of whole of government to support this industry, ⁓ you know, to boost stablecoin liquidity, those sorts of things. I think there’s lots of things we could do.
speaker-1: And ⁓ when getting the ear of government and the attention of government to make some of these changes, that there’s a productivity uplift, there’s economic impact of leveraging from stable coins or tokenization, for example. Do you think that there’s something that the government might be missing ⁓ when it comes to the conversation? I mean, you said it could move faster. We’re going in the right direction, but there’s a few things maybe ⁓ that we could refocus on.
speaker-0: Yeah, I think I think education is a big one. I think, you know, we’re as I said we’re putting the foundations in place in terms of legislation, regulation, policy f from that perspective. I think education needs to lift and and that’s something we obviously ⁓ both DECA and and Zodia reasonably well. Well I should say very well. But I think but I think there’s more we can do to lift that. At the moment, here in Australia. Yeah, digital adoption is not It’s it’s it’s it’s not widely adopted across the banks, not widely adopted across some of the businesses here in Australia. And and Fabia, you know, from a retail perspective to say that. And what I think we do need to do is educate what it means to manage digital assets and what those, you know, value propositions are to use those over traditional means. I think at the moment we’re we’re pushing those digital asset requirements down and just favoring the traditional means, and I think that’s the wrong thing to do. And it won’t be until we either see, you know, squeeze from overseas. To do it, or locally we sort of miss the boat on doing that, and we won’t see the value of making those decisions. And you know, a really easy one to make is if you think about how a bank operates today to send US dollars over into, let’s say, into the US, there’s a certain time frame it takes and it must go through a number of routes. We know that we can do that. Well, we know in the digital asset industry we can do that much faster, much simpler, much cheaper. But today that’s not available. through the banks because we need to get across the line in terms of how that will work. You know, will they see adoption through their client base? How do they position it for their clients? There’s all those things to move through. And I think it’s a it’s a you need to go through certain steps to get there. And one of those might be that a bank might offer two routes when they make your payments. And they might say, Well, the traditional route through Swift, here’s how it will here’s how it will move. We’ve got defined liquidity at the other end. It costs you this much money and it takes this much time. On the stable coin route, there might be limited liquidity, but it’s cheaper and faster, and here’s the Way to do it. And that way you give the client choice to do that on the UI for a bank, or you know, a more enhanced version of that is the bank actually understands the client’s risk appetite and it makes a decision behind the scenes. So the money moves as it would today. Essentially, you decide where it’s going and it moves, and then the bank decides in the back end how that will work. I think that’s where we need to move to eventually so that we start to actually lift up Australia in terms of operating in the right, you know, the right effort. and the right balance of activity through digital assets. Because I think right now we’re we’re we’re much below where we need to be. But I think the education piece is a long answer to that question, needs to happen first before we can do that.
speaker-1: So you Z Zodia is global and so you do have ⁓ quite good insight into the other jurisdictions whose and which countries ⁓ perhaps might be doing really well. Do you have any ⁓ anecdotal or examples of people who or jurisdictions who might be doing it a little bit better than us?
speaker-0: Yeah, I look I think absolutely. I think up in the UAE, you know, ⁓ we have a business up there. Certainly they are much more advanced in terms of the use of digital assets, how stable coins operate, managing ⁓ treasuries both with traditional assets and digital assets are doing very well. Singapore again as well is is quite advanced in terms of, you know, the requirements through the regulators and in terms of how they manage digital assets. I think Europe and the UK is Is you know they’ve been in this environment for a long time. Now the regulation is sort of starting to catch up, and that may change a little bit in the UK. But I think Australia is a little bit behind in terms of but we can quickly catch up. I think this legislation is really key for us because it brings you know validation to the industry, and I think it brings validation to also the participants in the industry to say, well, we can actually do this now that it’s regulated, we feel safe, we can start to operate properly. I think if If we didn’t have regulation or let’s say legislation regulation in place this year, we would not be seeing ⁓ some of the other larger financial institutions move into the space that couldn’t do it at all.
speaker-1: So that sounds ⁓ the international interest sounds like a p a positive consequence to some of the legislation that we’re seeing here. But if we i we have an opportunity to speed up, to take the lead. ⁓ I think we’ve moved up the ranks a little bit since the ⁓ legislation, the digital asset platform legislation was released and passed. ⁓ that is a first step. ⁓ baby steps, I guess. ⁓ but still huge for us ⁓ as a digital economy. If we were to pause now or to not prioritize the progression of a regulation or that regulatory clarity, because there’s still a few gaps, industry has has put forward a few issues. ⁓ What do you think the consequence would be if there wasn’t attention on the industry anymore?
speaker-0: Look, I think You know, for us, you know, the stage we’re at to your point, we are slowly accelerating towards where we need to be. We’re certainly behind. I think the consequence would be that we do far too f we we do fall too far behind and are unable to catch up. And what I mean by that is the technology can catch up, but actually where you know, where the deals are done, where the opportunities are, how we manage, you know, let’s say Australian stable coins the challenge for them as well, more globally, that’s that’s gonna be too that’s gonna be too hard to overcome if we can’t actually get that right. And I think going back to my point before around, you know, what can we do to encourage you know adoption here in Australia, I think there needs to be a certain level I guess of again, education, but also ⁓ for people to really push that point on what Australia is doing in this market, how it affects people on a day-to-day level, how it affects corporates, governments and so on and so forth. If we don’t do that, then we we will fall behind and I think Australia will will f basically be a country under Asia, under APAC that operates in digital assets, but is not seen as a as a as a power in this space.
speaker-1: What does that look like? If Australia is underperforming on the global stage with respect to our ability to interact with the digital economy, with different countries, to trade, to send stablecoin payments internationally, if we don’t have that framework, ⁓ what does the rest of the world look like and what does Australia look like? Do we make it or is it okay still, or is it actually, I don’t know, d diabolical? Like w at what level is it ⁓ for us to not move?
speaker-0: Yeah pressure. I mean diabolical is a bit cool, right? I th I I don’t think anything’s gonna be diabolical, but I I do feel strongly enough to say, you know, we are making some good moves now at the moment, but if we don’t make those, there are a lot of businesses here in Australia that are fledging in terms of, you know, ⁓ ETFs, you know, ⁓ bond issuance companies, all these other companies are looking at the different ways to offset challenges in a traditional market by utilising digital digital assets. If we don’t do some ch if we don’t knock over some of the the roadblocks in front of them, they will move those options offshore or they simply won’t happen. And so that’s that to me is opportunity lost. And I think that’s the biggest thing that we’re facing into is The slower we are, the less we all get behind this industry, the more of those opportunities will be lost and the more people will move offshore and companies will move offshore. And I think that’s the biggest challenge we’ll see. Whether that’s diabolical, I think that’s just situational, but I think that’s the biggest challenge we’re facing.
speaker-1: I think it’s hard for a a an economy to grow and flourish if the talent and the businesses go offshore. I might I might throw the label of diabolical on that particular situation, right? But ⁓ but we do have an opportunity, like you say, ⁓ to really take the bull by the horns and ⁓ and innovate ⁓ in digital assets and and build a pretty epic digital economy if we want to. Yes. ⁓ we just need the right policy settings, I guess. If we go back to custody itself and and talk a little bit about risk and what Zodia does. We have you’ve got some wonderful clients who you provide services for. What risk are you abating? What what is it that you are protecting from? Sure.
speaker-0: So I think in its It’s basic format in terms of Zodia. We are, you know, a wallet infrastructure provider and we essentially are utilizing that wallet infrastructure to provide cold storage for digital assets. So we are managing assets offline for clients and what we believe is the most safest application of managing dis digital assets, which is almost in real time. So it’s offline, but we basically have the option of moving those assets in near real time, which I think is we we probably want The only custodians in the world to do that right now. And so that means for us we’re providing safety and assurance to our clients, and surety, I’d say, and so that they can feel safe that their assets are managed appropriately. What we’re doing on top of that is we manage, ⁓ we obviously manage the the risk and compliance of those assets, we manage fraud controls over the top, ⁓ we manage all the whitelisting procedures, so checking in terms of where those assets are going and coming from, importantly, and so essentially. what we’re trying to do is take all of the challenge away from our clients and let them do what they need to do. So be that an exchange, an ETF provider, a broker, a bank, we essentially run the back end and the wallet infrastructure and let the client do the front end, which is really spend time with their clients and make sure they’re getting value there. So that’s what we do in in basic format.
speaker-1: I’m interested to know ’cause I I have thought about Australia holding their own digital assets, ⁓ either as a reserve and other countries who are looking at that and really thinking hard about custody and how they’re gonna hold those digital assets on behalf of the country and and the government. ⁓ this is not a question that I gave you any ⁓ advance notice of, but I I have been curious because it there is an opportunity also around digital assets for the Australian government and what are the if there are any considerations that you can think of ⁓ for us to do so and benefit from leveraging digital assets?
speaker-0: Yeah. I look I think it’s a it’s a great question. I think it’s a question on many countries’ minds right now whether they should do that and there’s some that are already starting to push forward. I think it’s it it would be disappointing if we didn’t do it as a country. And I think there’s a lot of advantages ⁓ that come from that, many that we talked about before in terms of supporting businesses on the ecosystem here in Australia, but also protecting the forward view that we have from a digital asset industry. ⁓ I think the challenges that we have is it’s not afforded for in current policy and legislation. So there’s challenges there. And it’s also not on the radar ⁓ of the current government. That’s not to say that it’s not behind the scenes, but I think it’s a big piece to roll out. And I think ⁓ you know, I know there’s a lot of people working on that behind the scenes, which is fantastic. ⁓ but I think it’s something that’s gonna take some time to to to get across the line.
speaker-1: I’ve got a closing question for you. Sure. well actually a couple. Okay. if you and I and I ask this of our guests just to think about ourselves a few years ahead and to think, what is it that we did well in twenty twenty six or during the twenties?
speaker-0: What is it that we did well?
speaker-1: Mm. ⁓ what are we doing well right now?
speaker-0: ⁓ many things, too many to label. Look, I you know, and and people hate it when I point this out, but I think what we have done in in Australia and I think in
speaker-1: ⁓ really? Just one?
speaker-0: And some of the other countries around the world as well as we’ve actually we’ve got strong regulation that has managed a financial system through some challenging times. I think we’ve structured that well and we’ve taken our time in terms of producing legislation, regulation to appeal to the digital asset community. I think that’s and many people dis disagree with me and and probably most people that haven’t worked on the regulated side will say, ⁓ it’s it’s way too long. But I think I think it’s a good thing. I think it gives us a great foundation. I know there’s still work to do, which is good. I think we’ve, you know, we’ve got a basis to work from. I think we’re making the right moves and we’re doing it as in a safe way. What I would like to see more of, maybe this is part two of your question, is the educational uplift. I want to see the encouragement that we are going through, you know, what is probably going to be one of the biggest changes in financial services. know the century in terms of there’s another way of doing things and that needs to move in concert. And if we can get it right, essentially there won’t be two parts of the financial system, it’ll be just one operating. And it’ll be what it’ll choose whatever path that it needs to do in terms of risk protocols, you know, speed, time, price, etcetera. That’s where we’re heading. And I think if we can do some things right, and education, I’ll say it again, is the most important part there, ⁓ we’ll we’ll we’ll have a lot of things to be proud of.
speaker-1: And ⁓
speaker-0: Was that the second part? No. No. ⁓ well
speaker-1: So well I wanna know wha if there are any red flags. Like what what do you think we should avoid? Is there anything apart from falling behind, not keeping up with the the rest of the global digital economy, infrastructure services and providers, what
speaker-0: Yeah, that’s a good question. I think the r red flag for me and it’s more what I perceive rather than what I know to be true at the moment is in some scenarios where we have gone through this legislation or or repolicy of of an industry, we have made it challenging for smaller operators to to operate because you know, the cost of regulation, the cost of governance, ⁓ The cost to comply is too high. And what you do then is you really stifle that competition. And I think that’s something we could we could walk into here. I don’t think we’re doing it yet, but that is something we should avoid at all costs. We need to encourage, you know, new businesses here in Australia, people who are, you know, ⁓ trying things that are, you know, global firsts, you know, keeping the talent here in Australia and and driving this industry forward. We have so many great people, great businesses, you know, great peak industry bodies. should say we’ve got this amazing talent and I think if we try and push too hard on the on the legislation side, we might stifle it a little bit. So we’ve just gotta we’ve got to we’ve got to look after those people I think. And those businesses.
speaker-1: Yeah, it might it might be a bit of a mindset change ’cause Australia does ha have a few monopolies and we push competition out a lot of the time. So we might have to shift the way we do business maybe. I don’t know. Well, Ryan, it’s good to have you on Houses Digital. Thanks for joining us. Thank you. Digital, where policy meets innovation. Stay curious, stay inspired, and be part of the movement Building Australia’s Next Economy. The future is happening now. See you in the next episode.