Sumitomo Mitsui Trust Bank, a major Japanese financial institution, is all set to enter into cryptocurrency custody business. The bank has collaborated with Bitbank, a Tokyo-based cryptocurrency exchange, for the creation of a digital asset business this year. The business, which will be known as Japan Digital Asset Trust and will be owned 15% by Sumitomo Mitsui Trust and 85% by Bitbank, will focus on providing institutional customers with crypto and NFT custody. According to local media, the goal of the move is to grab the local institutional sector, which still perceives custody as a barrier to investing in these new products.
Sumitomo Mitsui Trust believes that investors will be more comfortable owning digital assets if custody is given by established financial institutions rather than crypto exchanges, which sometimes do not receive the same scrutiny from established regulatory organisations. The company’s capital is allegedly 300 million yen ($2.3 million) at the outset, with the two corporations anticipating more investors to jump in to bring the total to 10 billion yen ($78 million).
The new business intends to begin operations this year, as competitors race to deliver these services to the Japanese market. Nomura and Crypto Garage are also forming a partnership to provide comparable services to their consumers. The Japan Digital Asset Trust, on the other hand, will provide a distinct product. According to sources, the new business intends to introduce a yen-pegged stablecoin, backed by legislation that allows banks to do so. No more information has been provided by any of the partners.
While the firm is entering the crypto industry during a market slump, with bitcoin and other cryptocurrencies losing a major portion of their value, the growth of the metaverse and blockchain gaming might fuel interest in cryptocurrency during this moment. Japan Digital Asset Trust expects demand for stablecoins, which typically do not suffer from the same volatility issues that other cryptocurrencies do, to climb as metaverse worlds gain popularity.
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