Sumitomo Mitsui Trust Establishes Crypto Company Targeting Institutional Clients

Sumitomo Mitsui Trust, one of Asia’s largest asset managers, will set up a company this year that will utilize Tokyo-based cryptocurrency exchange Bitbank to provide digital asset services to institutional clients. Newly created companies will hold cryptocurrencies and Non-Fungible Tokens (NFTs) for “large investors and businesses”.

Sumitomo Mitsui Trust focused on security issues

Bitbank, the latest crypto partner of Sumitomo Mitsui Trust, is known as Japan’s third largest cryptocurrency exchange and manages 200 billion yen of customer assets.

The crypto giant owns 85% of the newly established Japan Digital Assets Trust (JDAT) and the Sumitomo Mitsui Trust holds the rest. With an initial capital of 300 million yen ($2.3 million), JDAT plans to increase its capital base to 10 billion yen ($78 million) through future fundraising. applied area From Nikkei Asia.

Building on common concerns about the security issues of holding cryptocurrencies, the new partnership will focus on building a “strong security system for new companies”. The report explained that large investors are still “vigilant about owning digital assets” as centralized crypto exchanges do not have to worry about private investors holding their private keys.

The Sumitomo Mitsui Trust believes that theft of the crypto space is a common barrier for institutional investors who tend to entrust these types of assets to “hard financial institutions” rather than holding them personally. The bank felt that the new crypto effort would eliminate institutional concerns about investing in digital assets.

It is worth noting that JDAT will be working on a yen-denominated stablecoin in response to growing interest in the metaverse, as JDAT believes that cyberspace, closely related to virtual reality, will stimulate demand for such assets.

Competition among Japanese banks intensifies

Sumitomo Mitsui Trust is not the only banking company doubling its efforts on crypto-related services. For example, major competitor Nomura announced last week that it will create an institution-centric cryptographic device. The bank expected the cryptocurrency sector to mature over time and become more regulated, making it even more attractive to institutional clients.

In July 2020, Japan’s largest investment bank partnered with Ledger and investment firm CoinShares to launch a custodial service for traditional investors through Komainu. Komainu is the first regulated digital asset storage solution built by institutions for institutions.

Featured images courtesy of Fortune

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