Sumitomo Mitsui Trust, a leading financial institution, is entering into the crypto custody business. The company has partnered with Bitbank, a Tokyo-based crypto exchange, to launch a new company and focus on providing institutional-grade custody for non-fungible tokens (NFTs) and other digital assets.
Sumitomo Mitsui Trust Bank to Venture into the Digital Custody Business
Sumitomo, one of the top financial organizations in Japan, has made the big decision to enter into the digital asset custody business. The company will create a new digital assets custody firm, to go by the name Japan Digital Asset Trust, in partnership with Bitbank. Sumitomo will hold 15% of the new company while Bitbank will have the majority, 85%.
According to reports released by the local media, the objective of this move is to capture the local institutional customer base. The institutional market has been seeing the idea of crypto custody as a major deterrent. Therefore, Sumitomo Mitsui Trust holds the view that investors will be more comfortable holding digital assets when the custody is offered by respected institutions instead of crypto exchanges, which lack strict financial scrutiny.
The capital base of the company has reached USD 2.3 million at the start, and the two parent firms expect more investors to jump in, growing the base to USD 78 million in the coming years.
Competition and Operations
The new company is aimed at starting operations this year as other competitors are working to debut in the Japanese market. Nomura, for example, has partnered with Crypto Garage to create a joint venture to offer similar services to clients.
The Japan Digital Asset Trust will, however, offer a different product. Reports indicate that the new company plans to issue a stablecoin pegged to the Japanese yen and supported by the country’s regulations. However, the full details of this are yet to be unveiled.
Although the company is getting into the market when the prices of most cryptos are on a downward spiral, metaverse and blockchain could help to accelerate interest in digital currencies and blockchain. Japan Digital Asset Trust expects the demand for stablecoins to continue growing because it does not suffer the same volatility as the other cryptos.