Business 3 August 2018

Gerald Fenech

Japan’s SBI eyes crypto derivatives platform with US investment

SBI Crypto Investment, a unit of Japanese financial services group SBI Holdings, has acquired a 12 percent stake in a U.S.-based electronic trading platform and operator Clear Markets, which offers over-the counter derivatives electronic trading services in the United States, United Kingdom and Japan.

Although the price was not disclosed, the 12% stake is likely to be worth JPY1 billion ($9 million), according to Nikkei Asian Review. SBI is expected to acquire up to 20% of the North Carolina-based company’s stakes in the future.

The investment is reportedly part of SBI’s effort to create a cryptocurrency derivatives trading platform for institutional investors. A derivatives market for virtual currencies remains undeveloped to date, which is why SBI Crypto is looking to create a platform for institutional investors “to smoothly trade” crypto-related instruments. Clear Markets will provide hedging for cryptocurrency swap transaction services which is “necessary for the handling of cryptocurrencies and financial instruments that use cryptocurrencies.”

Aside from SBI, Nikkei group subsidiary QUICK also holds a stake in Clear Markets.

Earlier this month, the SBI group invested in Canada’s Lancium Technologies. These provide wind power to virtual currency “mines,” which, in turn, consume large amounts of electricity. SBI expects to lower its environmental burden as a result of this investment.

Japan is one of the leading countries in terms of cryptocurrency adoption. Last week, the Japan Virtual Currency Exchange Association (JVCEA), in an attempt to prevent investors with small assets from suffering heavy losses, said that it would require its member exchanges to place limits on the trading activity of some of its clients.

SBI Holdings launched its SBI Virtual Currencies exchange, allowing investors to trade in Bitcoin Cash (BCH), along with ETH, XRP, and BTC. The company’s president, Yoshitaka Kitao, anticipates using BCH as the settlement currency, given the fact that BTC is expensive and “tiring as a settlement currency.” Kitao added that the exchange’s remittance currency would be XRP.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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