Sumitomo Mitsui Trust, a major Japanese bank, is reportedly entering the cryptocurrency custody business. The company is said to be partnering with Bitbank, a Tokyo-based cryptocurrency exchange, to launch a new company focused on providing institutional-level custody for digital assets and NFTs.
Sumitomo Mitsui Trust Bank to Enter Digital Custody Business
Sumitomo Mitsui Trust Bank, a leading Japanese financial institution, has decided to enter the cryptocurrency custody business. The companyannounced that it will launch a digital asset custody company in partnership with Bitbank, a Tokyo-based cryptocurrency exchange. Under the name Japan Digital Asset Trust, the company will be 15% owned by Sumitomo Mitsui Trust and 85% by Bitbank, and will focus on providing crypto and NFT custody for institutional investors.
According to local media, the goal behind this move is to capture the local institutional market, which still sees the custody issue as a deterrent to investing in these new products. SMMT believes that investors will be more comfortable holding digital assets if custody is provided by a recognized institution in the financial community, rather than a crypto exchange that often does not face the same scrutiny from established regulators.
Capital is estimated at 300 million yen ($2.3 million) at the start, and the two companies hope other investors will jump on board with the proposal, which could reach 10 billion yen ($78 million).
Operations and Competition
Competitors are also rushing to bring their services to the Japanese market, and the new company aims to begin operations this year. Nomura Securities and Cryptogarage have also set up joint ventures to offer similar services.
However, Japan Digital Asset Trust also plans to offer a different product. According to reports, the new company has plans to issue yen-pegged stable coins backed by regulations that allow banks to launch this type of product. No further details on this were available from any of the players in the partnership.
The company entered the crypto sector during a market downturn in which bitcoin and other cryptocurrencies lost much of their value, but the rise of the metaverse and blockchain game could be a driving force behind increased interest in cryptocurrencies during this period. JDT is said to expect demand for stable coins, which typically do not suffer from the volatility issues of other cryptocurrencies, to increase with the rise of the metaverse world.
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