SBI Expands Its Crypto Business By Investing $9 Million In Clear Markets
Japan’s SBI has invested $9 million in buying shares in the U.S based digital marketplace firm, Clear Markets. Buying a stake in the crypto exchange will see the Japanese financial services firm increase its portfolio in the digital currency sector.
According to the financial results of SBI, the firm has spent $9 million to purchase a 12% shareholding in Clear Markets. The Japanese firm also has plans to increase the said shareholding to 20% in time to come.
Clear Markets focuses on building electronic trading systems. It also runs its own electronic trading networks which provide over the counter derivatives services. In as much as, the firm is Headquartered in Charlotte, North Carolina, it runs branches in London, New York, and Tokyo.
Clear Markets intends to use the funds to develop a digital currency derivatives trading network specifically for institutional investors. In acquiring a stake of the U.S firm, SBI will benefit from the development of an institutional investors' only, derivatives exchange.
The said exchange will enable the trading of products that are linked to Bitcoin’s price movements and other digital assets by institutional investors. This will enable the large money investors to hedge the risk of crypto's price volatility against such products as futures, options, and swaps. This will enable the institutional investors to cushion themselves against losses.
Even though digital assets are one of the most promising assets in the market, their price volatility poses a great hindrance to their adoption. This and the lack of regulated custodians are the major reasons as to why institutional investors tend to keep off from investing in the sector.
The U.S Commodity Futures Trading Commission (CFTC) has already issued Clear Markets with a swap execution facility (SEF) license. The firm has also been accorded a derivatives brokerage status in 33 European countries including the U.K.
The plan by Clear Markets to introduce a digital currency swap trading exchange, coupled with the licenses it holds will definitely attract institutional investors. This group of investors includes hedge funds, family offices among others.
This is not the first time SBI is investing in the crypto sector. It has stakes in over 20 digital currency associated projects. The firm’s recent project was the introduction of VCTRADE on July 17, which is a public crypto exchange.
The U.S market has two authorized and regulated trading platforms, CBOE as well as CME. Both of them focus on offering contracts based on Bitcoin Futures.