Japanese Bank Sumitomo Mitsui Trust to Launch Cryptocurrency Custody Business
Sumitomo Mitsui Trust is one of the major banking institutions in Japan, to reportedly enter the cryptocurrency custody business. The company is entering a partnership with Bitbank, a Tokyo-based cryptocurrency exchange, to launch a new company that will focus on offering institutional-grade custody for digital assets and NFTs.
Sumitomo Mitsui Trust Bank to Enter Digital Custody Business
Sumitomo Mitsui Trust Bank, a major financial institution in Japan, has decided to enter the cryptocurrency custody business. The company has announced that it will launch a digital assets custody company in partnership with Bitbank, a Tokyo-based cryptocurrency exchange. The company, which will be named Japan Digital Asset Trust, will be owned 15% by Sumitomo Mitsui Trust and 85% by Bitbank, and will focus on providing custody of crypto and NFTs to institutional customers.
Local media reports, that the objective behind the move is to occupy the local institutional market that still sees the issue of custody as a deterrent to investing in these new products. Sumitomo Mitsui Trust believes that the investors will be more comfortable holding digital assets if the custody is provided by recognised institutions in the financial world instead of crypto exchanges, which are not subject to the same scrutiny from the established regulatory bodies.
The capital of the company is reportedly 300 million yen ($2.3 million) to begin with, but the two companies are anticipating other investors to jump into this proposal to attain 10 billion yen ($78 million).
Operations and Competition
The new company hopes to start its operation this year, as other competitors are also urging to provide these services to the Japanese market. Nomura and Crypto Garage are also launching a joint venture to offer similar services to their customers.
However, the Japan Digital Asset Trust will also be offering a different product. There are reports, that the new company has plans to issue a yen-pegged stablecoin, supported by regulations allowing banks to launch this kind of product. There is no details on this from any of the players in the partnership.
While the company is entering the crypto sector during a downturn in the market, with bitcoin and other cryptocurrencies losing a large part of their value, the rise of the metaverse and blockchain gaming could power the interest in cryptocurrency during this period.
Japan Digital Asset Trust is said to expect demand for stablecoins, which usually don’t suffer the same volatility problems that other cryptocurrencies do, as metaverse worlds rise to prominence.
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