Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
The name disclosed to reporters is Japan Digital Asset Trust Preparatory Company (JADAT), however, it is expected to be shortened to Japan digital asset trust.
With the rising demand for digital assets by institutional investors, the Japanese bank Sumitomo Mitsui Trust Holdings (SuMi) has announced that it has partnered with crypto exchange Bitbank to launch the Trust Company. The name disclosed to reporters is Japan Digital Asset Trust Preparatory Company (JADAT), however, it is expected to be shortened to Japan digital asset trust.
The announcement further reveals that the company is meant to offer custodial services as well as auditing and wallet insurance. As part of the custodial services, JADAT will offer digital asset holdings including security tokens on a public blockchain, cryptocurrencies, stablecoins, and NFTs. The digital asset will be stored on hardware wallets or cold wallets. Also, it has been designed with high-security measures including Hardware Security modules (HSM) and multi-sig.
Custodial services are the backbone for the institutional adoption of cryptos as investment assets. According to Bitbank Chief Executive Officer Noriyuki Hirosue, the Japanese crypto market is dominated by retail investors compared to the US market which is largely made up of institutional investors. Also, the rising number of crypto theft recorded on various exchanges in Japan and other countries has been a major problem.
“The biggest problem is that there is not a trustworthy digital custody service. Given the past incidents, crypto companies do not enjoy public trust. We need cooperation from a major trust bank,” said Hirosue.
The successful implementation of custodial services could increase crypto interest significantly, according to Hirosue. SuMi has a very good history of centralized and decentralized finance. Since 2002, it has been actively providing financial services to both retail and wholesale customers. It is also known as a publicly traded holding and specialized trust bank group.
Bitbank, on the other hand, also has a monthly trading volume of more than $5 billion, making it one of the largest exchanges in Japan. Considering their background, their expertise will be crucial in making JADAT a success. Also, the firms have signed a memorandum of understanding. This means an agreement has been made to analyze the possibility of SuMi investing in the established company. As it stands, the firm is currently seeking a custodial trust company license.
“JADAT aims to have necessary factors of digital asset management for institutional investors and enterprises, such as access to digital asset exchanges, buying and selling executions, the audit by external auditors regularly, and insurance coverage,” said the company.
The crypto adoption rate in Japan has been very impressive as companies are staging interesting moves into the ecosystem. It can be recalled that Nomura Holdings Inc (TYO: 8604), and Komainu, its joint venture company, collaborated last year with Crypto Garage to provide custodial services related to cryptos for investors. In addition, SBI Motor Japan announced earlier this month that it will accept BTC and XRP as payment options.