SBI cracks Tokyo’s stone-faced regulators to launch Japan’s first crypto fund

Sam Cooling

September 3, 2021 at 9:44 AM·3 min read

SBI Group – one of Tokyo’s most innovative financial services giants – is set to launch Japan’s first crypto fund, granting investors the opportunity to expose their portfolios to digital assets such as Bitcoin and other cryptocurrencies.

The proposed fund, which would be set up under the operations of SBI Digital Asset Holdings – a subsidy of the parental SBI Holdings – will launch in November and is expected to involve a substantial investment in the hundreds of millions.

Japan is infamous for its strict crypto regulatory environment. There are only a handful of crypto assets available legally to Japanese retail investors – Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Ripple (XRP), and most recently Cardano (ADA).

Cardano was recently approved by the air-tight Japanese financial watchdog – a significant and exclusive accomplishment.

SBI CEO Tomoya Asakura highlighted how the launch of the first crypto fund in Japan will make it significantly easier for Japanese capital to enter into crypto markets under the management of a team that can balance the volatility of cryptocurrencies with the tough demands of regulators.

“I want people to hold it together with other assets and experience first hand how useful it can be for diversifying portfolios,” he said.

“There is an overwhelming perception that cryptocurrencies are highly volatile and speculative.

“If our first fund goes very well, we’d like to move quickly.”

SBI Digital Asset Holdings is already heavily-involved with the Japanese crypto sector, the institutional financier currently operates two exchanges – SBI VC Trade and the TaoTao platform – alongside further interests in both cryptocurrency mining and liquidity provision.

Japan’s air-tight regulations

The announcement of a fund launch by November comes at the tail end of more than four years work between SBI and Tokyo’s Financial Service Agency (FSA).

Japan’s air-tight regulations have not been easy to engage with, especially as the regulator moved to ban the sale of Greyscale-like cryptocurrency investment trusts – the original SBI plan.

This led to SBI formulating a unique approach that utilises an investment vehicle called an anonymous partnership.

Effectively, this partnership represents an agreement between two parties to share the proceeds of a business deal which will be carried out by an active partner in the silent partners name.

In this instance, investors in the SBI fund will effectively be entering into a business contract related to the custodial management of crypto assets, instead of investing in trust.

SBI is able to therefore appear on paper as a brokerage custodian instead of a high-risk fund in a volatile market environment.

This comes amid calls from some Japanese lawmakers who believe current licencing isn’t strict enough, pushing for the Tokyo financial regulator to consider tightening the rules urgently.

Despite efforts by the FSA to slow the permeation of crypto assets into Japanese portfolios, it appears Japanese investors are refusing to be left behind. During the past year, the number of crypto deposits has grown seven-fold to around $13bn according to the Japan Virtual and Crypto Assets Exchange Association.

More crypto news and information

If you want to find out more information about the environmental impact of cryptocurrency and other cryptocurrency news, then use the search box at the top of this page. Here’s an article to get you started.

As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.

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Japan’s air-tight regulations

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