Japan’s biggest bank enters into the cryptocurrency custody business
Sumitomo Mitsui Trust, one of Japan’s leading banking institutions, will enter the cryptocurrency custody business.
The company announced that it will launch a company in partnership with Tokyo-based exchange Bitbank. Being 15% owned by Sumitomo Mitsui Trust and 85% by Bitbank, the company was named Japan Digital Asset Trust, and will focus on the custody of cryptocurrencies and NFTs for institutional clients.
The aim seems to be to capture the local institutional market, which still sees custody as an impediment to investing in digital products and assets. Sumitomo Mitsui Trust believes investors will be more comfortable holding digital assets if custody is provided by recognized financial institutions rather than exchanges, which often do not undergo the same rigorous scrutiny by regulators.
The Japan Digital Asset Trust is expected to start operations later this year, especially as other competitors are also rushing to bring these services to the Japanese market. However, the new company also aims to offer a unique product.
The Japan Digital Asset Trust is believed to expect demand for stablecoins and so, according to reports, the company has plans to issue a yen-pegged stablecoin, backed by regulations that allow banks to launch this type of product.
Demand is expected as stablecoins generally do not suffer from the same volatility issues as other cryptocurrencies, which could explain a traditional institution’s motivation to enter the new sector during a market downturn. Details about the product have not yet been disclosed by the participants of the partnership.