Sumitomo Mitsui Trust to Establlish a Crypto Firm Targeting Instiutional Clients

Sumitomo Mitsui Trust – one of the largest asset managers in Asia – will tap Tokyo-based crypto exchange Bitbank to set up a company offering digital asset services to institutional clients this year. The newly created firm will hold cryptocurrencies and Non-Fungible Tokens (NFTs) for “large investors and corporations.”

Sumitomo Mitsui Trust Focused on Security Issues

Sumitomo Mitsui Trust’s latest crypto partner Bitbank reportedly ranked as the third-largest crypto exchange in Japan, managing 200 billion yen in customer assets.

The crypto giant will own 85% of the newly-founded firm Japan Digital Asset Trust (JDAT), and Sumitomo Mitsui Trust will hold the rest. With an initial capital of 300 million yen ($2.3 million), JDAT plans to expand its capital base to 10 billion yen ($78 million) through future fundraising, according to the coverage by Nikkei Asia.

Based on a shared concern regarding the security issue in holding cryptocurrencies, the new partnership will focus on building “a robust security system for the new company.” The coverage outlined that as centralized crypto exchanges exempt retail investors from worrying about holding private keys, large investors still “remain wary of owning digital assets.”

Sumitomo Mitsui Trust believes theft in the crypto space is a common barrier to institutional investors, who tend to entrust “well-established financial institutions” instead of personally holding such a type of asset. The bank considered its new crypto endeavor will remove institutions’ concern about investing in digital assets.

It’s worth noting that JDAT will work on a yen-denominated stablecoin as a response to the growing interest in the Metaverse since the firm believes that cyberspace closely associated with virtual reality will stimulate the demand for such assets.

Growing Competitions Among Japanese Banks

Sumitomo Mitsui Trust is not the only banking giant doubling down its endeavors on services related to cryptocurrencies. Its main competitor Nomura, for instance, announced last week that it would create an institutions-focused crypto unit. The bank expected the crypto sector to mature over time and become better regulated – making it even more attractive for institutional clients.

In July 2020, the largest investment bank in Japan launched a custodial service for traditional investors through Komainu in partnership with Ledger and investment company CoinShares. Komainu is the first regulated digital assets custody solution built by institutions for institutions, the entity claimed.

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