Banking Capital markets News

SBI plans Japanese crypto asset fund, half in XRP. Says it’s largest R3 investor

SBI

Last week SBI gave an investor presentation in which there was significant coverage of digital currencies, securities token offerings and blockchain. Most of the activities were previously announced, but three pieces were newsworthy. Firstly, it mentioned creating a crypto-asset fund targeted at individual investors. It claims it is R3’s largest outside shareholder. And SBI states it wants to extend its collaboration with 13 investee companies that relate to digital assets or “make them subsidiaries”. 

The Crypto asset / XRP fund

The presentation includes a pie chart for a new cryptocurrency fund in which 50% of the assets are XRP, roughly 30% in Bitcoin and 20% Ether. It plans to involve several group subsidiaries in the fund management, including SBI Alternative Investments, SBI Securities and SBI Moneyplaza for distribution, and crypto asset exchange SBI VC Trade for investment and custody. Morningstar Japan is referenced as providing “adoption ratio advice” for the portfolio. This could mean that the 50% XRP proportion is just illustrative. Fundraising is expected to start in the summer of 2020.

However, the presentation also included mention of another fund for which there was more detail. The “4+5 Fund”, a nod to Industry 4.0 and Society 5.0, will be up to JPY 100 billion ($928 million).

Digital asset push

SBI outlined a six point strategy, four of which relate to the blockchain and digital asset sector.

Firstly, it plans to establish a global organizational structure for digital assets. It listed 13 firms in which it has investments, including Bison, R3, Securitize, Templum and Ripple. It said it wants to promote business alliances with these or “make them into subsidiaries”. 

Next, it wants to transform financial transactions through security token offerings. Here the self regulatory body Security Token Offering (STO) Association is an important part of its plan. Since its launch nine months ago, it has expanded its founding membership from six to ten by adding SMBC Nikko Securities, Tokai Tokyo Securities, Mizuho Securities and Sumitomo Mitsui Trust Bank as well as 14 other companies as support members.

It showed a world map for its STO ecosystem in which Boerse Stuttgart, Securitize and Templum feature prominently.

Thirdly, SBI plans to support large companies in adopting blockchain for supply chain management. It gave a case study of Siam Cement using R3’s Corda blockchain in collaboration with Digital Ventures and Accenture.

It also outlined its collaboration with SMBC, where there’s an MOU for SMBC to take a 14% investment in SBI R3 Japan. SBI would retain 51% and R3 35%. A diagram states that SBI is R3’s largest outside shareholder, a claim it has previously made. Additionally, SMBC is a participant in the Corda based trade finance platform, Marco Polo.

The fourth strategy is to leverage its Ripple-based Money Tap application to provide an inexpensive paymnet service in Japan. It now has 35 banks on board. Initially, Money Tap was part of the SBI Ripple Asia joint venture. But SBI separated it into an independent venture. The presentation said that Money Tap will “consider accepting an investment from U.S. Ripple”.


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