Japan's first! Financial giant SBI is about to launch a crypto fund for retail investors

Japanese financial group SBI Holdings plans to launch its first cryptocurrency fund for long-term retail investors by the end of November this year, Bloomberg reported on Thursday, which will provide Japanese residents with investment exposure to Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), XRP, etc.

Tomoya Asakura, SBI director and senior managing executive officer, said the firm could see the fund growing to hundreds of millions of dollars and that investors would likely need to put in at least around 1 million yen ($9,100) to 3 million yen, mainly for people who understand the risks associated with cryptocurrencies, such as wild price swings.

“I want people to combine it with other assets and experience for themselves how it can diversify their portfolios,” Asakura said in an interview. “If our first fund goes really well, we’d like to move quickly to build a second fund.”

Digital assets are growing in popularity in Japan despite tighter regulation of cryptocurrency businesses than in many other countries. Coinbase, the largest U.S. cryptocurrency exchange, recently launched a local trading platform, and cryptocurrency trading volume more than doubled to 77 trillion yen in the first half of 2021 from the same period last year, according to an exchange association.

It took SBI four years to launch the fund, in part because of tightened regulations in response to hacking and other domestic scandals. Japan’s financial regulator, the Financial Services Agency, or FSA, has banned companies from selling cryptocurrencies through investment trusts and has also required crypto exchanges to register nationwide and issue licenses to platforms that want to operate in Japan.

The company decided to use a process called “anonymous partnership” with investors who agreed to provide funds to SBI.

“There is a widespread perception that cryptocurrencies are highly volatile and speculative,” Asakura said. He said his job is to build a “track record” to show the public and regulators that investors gain a more resilient portfolio by adding cryptocurrencies.

He said cryptocurrency funds could be “satellite” assets in a portfolio, rather than those considered “core,” which would help boost overall returns. He added that SBI is willing to launch another fund designed specifically for institutional investors if there is enough demand.