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The Leading Bank In Japan Has Entered The Crypto Custody Business

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Sumitomo Mitsui Trust, a leading Japanese bank, will enter the cryptocurrency custody sector.

The firm announced the formation of a joint venture with the Tokyo-based exchange Bitbank. The company, which is owned 15 percent by Sumitomo Mitsui Trust and 85 percent by Bitbank, has been dubbed Japan Digital Asset Trust and will focus on the custody of cryptocurrencies and NFTs for institutional clients.

The goal appears to be to get access to the local institutional sector, which still views custody as a barrier to investing in digital products and assets. Sumitomo Mitsui Trust believes that investors will be more comfortable owning digital assets if custody is given by established financial institutions rather than exchanges, which are not often subjected to the same stringent regulatory scrutiny.

The Japan Digital Asset Trust is slated to launch later this year, despite the fact that other companies are also rushing to provide these services to the Japanese market. However, the new business aspires to provide a one-of-a-kind product.

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According to sources, the Japan Digital Asset Trust anticipates demand for stablecoins and wants to create a yen-pegged stablecoin backed by legislation that allow banks to launch this type of product.

Stablecoins do not have the same volatility issues as other cryptocurrencies, which could explain why a traditional institution would want to enter the new industry during a market collapse. The partnership’s participants have not yet revealed any information regarding the product.