SBI Holdings Seeks to Launch Japan’s First Crypto Fund

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In Brief
  • Japanese financial conglomerate SBI Holdings Inc. hopes to launch the country’s first cryptocurrency fund by the end of November.

  • President of an SBI affiliate Tomoya Asakura particularly emphasized the diversification benefits of cryptocurrencies, rather than their speculative qualities.

  • SBI spent four years getting the fund off the ground, which was impeded several times due to scandals tightening regulations.

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Japanese financial conglomerate SBI Holdings Inc. hopes to launch the country’s first cryptocurrency fund by the end of November.

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The fund could include cryptocurrency staples such as Bitcoin, Ethereum, XRP, Bitcoin Cash, Litecoin, and grow to several hundred million dollars. The fund aims for investors who understand risks associated with cryptocurrencies. Due to these risks, investors will likely have to put down a minimum of 1-3 million yen ($9,000-$27,000).

Crypto diversification

President of an SBI affiliate Tomoya Asakura particularly emphasized the diversification benefits of cryptocurrencies, rather than their speculative qualities. Asakura even acknowledged this “overwhelming perception that cryptocurrencies are highly volatile and speculative,” in regard to his mandate. 

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He believes his job is to build a “track record” showing the public and regulators that investors get a more resilient portfolio by including cryptocurrencies. This is because they often move inversely to stocks and other traditional investments, he said. Additionally, Asakura said that cryptocurrency funds could act as a “satellite” asset in a portfolio, rather than those considered “core” investments. 

“I want people to hold it together with other assets and experience firsthand how useful it can be for diversifying portfolios,” said Asakura. “Once people feel it firsthand,” he said, “they will understand that we aren’t recommending cryptocurrencies as a tool of speculation.”

Crypto regulation in Japan

SBI spent four years getting the fund off the ground, which scandals and tightening regulations impeded several times. In 2019, Japan’s Financial Services Agency (FSA) strengthened regulations on cryptocurrency exchange operators after a massive theft the year before.

Additionally, the FSA banned companies from selling cryptocurrencies through investment trusts. This was a popular way of investing in Japan that SBI had initially sought to use for its fund. Now, the brokerage instead decided on a vehicle known as an “anonymous partnership.”

However, in spite of the potentially tougher regulations for cryptocurrencies, digital assets are growing in popularity in Japan. According to exchange association data, cryptocurrency transactions for the first half of 2021 more than doubled to 77 trillion yen from a year earlier. 

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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