Japan's financial services giant SBI Holdings has revealed an ambitious plan to create a "new financial ecosystem based on cryptocurrency." During its quarterly earnings briefing, President and CEO Yoshitaka Kitao detailed how the company is pursuing synergies between its traditional financial ecosystem and the emerging crypto ecosystem. The conglomerate is simultaneously developing eight distinct cryptocurrency businesses, including mining, hedge fund management, exchange platforms, financing, ICO and exchange rating information services, a derivatives market, remittance services, and transaction/payments services.
Eight-Pronged Strategy for a Crypto Ecosystem
SBI Group emphasized that all eight businesses will be developed "simultaneously to pursue synergy and mutual evolution." The company's domestic cryptocurrency exchange was among the first eleven Bitcoin exchanges in Japan to receive registration from the Financial Services Agency (FSA) last month. The launch timing for the exchange service depends on the progress of SBI Crypto's mining operations and the division situation related to the upcoming hard fork.
Mining is positioned as a cornerstone of the strategy. Citing the risk of a 51% attack from miners controlling the majority of the network's computing power, SBI announced it will "acquire cryptocurrency share through mining, in order to stabilize the market." This approach differs from purely profit-driven mining, aiming instead to ensure network security and market stability.
Institutional Investors and Derivatives
To address the high volatility of cryptocurrencies, SBI plans to create a crypto derivatives market and manage crypto hedge funds, providing new trading opportunities for institutional investors. The company stated: "In order to stabilize the volatility in virtual currencies, the participation of institutional investors who make long-term investments are expected." This marks a clear effort to bridge the gap between traditional finance and crypto, leveraging SBI's existing brokerage, banking, and asset management subsidiaries to attract institutional capital.
The derivatives market will likely include futures and options on major cryptocurrencies, while the hedge fund business will manage diversified crypto portfolios. SBI's existing financial infrastructure, including SBI Securities—one of Japan's largest online brokerages—provides a ready distribution channel for these products.
ICO Ratings and Financing Services
In the initial coin offering (ICO) space, SBI is launching two related businesses. Its financing arm will promote "ICO and cryptocurrency bond issuance by companies specialized in cryptocurrency finance," aiming to begin around Spring 2018. Separately, the group will operate a cryptocurrency portal site that provides crypto-related and ICO rating information. Notably, SBI Holdings is the largest shareholder of Morningstar Japan, holding 49.54% of its shares. Morningstar Japan had already initiated Japan's first ICO rating business earlier in October 2017, giving SBI a strategic foothold in ICO information services and rating standards.
Remittance and Payments
SBI already operates a remittance business through its subsidiary SBI Remit, which utilizes Ripple's technology for cross-border payments. In May 2016, SBI Ripple Asia was established to drive a "remittance revolution" in Asia. The integration of crypto-based remittance and payment services with the exchange and mining operations could create a seamless ecosystem for moving value across borders.
By simultaneously advancing mining, exchange, derivatives, ICO financing, and payments, SBI Group is building a vertically integrated cryptocurrency platform. This comprehensive strategy reflects how major Japanese financial institutions are embracing digital assets in a systematic manner, potentially setting a template for other traditional financial players worldwide. If successfully executed, SBI's crypto ecosystem could become a dominant force in Japan and across Asia, shaping the future of crypto-finance.