As of 26 July 2024, Japan is set to join the global trend of Bitcoin exchange-traded funds (ETFs) following the partnership between Japanese financial giant SBI Holdings and American investment powerhouse Franklin Templeton. According to a recent report by Nikkei Asia, the two firms are gearing up to introduce cryptocurrency management services to the world’s third-largest economy, pending regulatory approval.
On 25 July 2024, it was revealed that SBI Holdings and Franklin Templeton will establish a digital asset management company as early as this year. This joint venture, with SBI holding a 51% stake and Franklin Templeton the remaining 49%, is strategically positioned to launch a Bitcoin ETF in Japan once the Financial Services Agency (FSA) grants approval. Franklin Templeton, managing approximately $1.6 trillion in assets, has been a pioneer in digital assets, having been one of the first to introduce spot Bitcoin ETFs in the U.S.
The timeline for launching Bitcoin ETFs in Japan is set for the end of the year, aligning with the country’s anticipated regulatory framework for cryptocurrency ETFs. The partners are in the final stages of establishing the necessary infrastructure to support these innovative financial products. The swift approval process witnessed in other markets such as the U.S. and Canada bolsters confidence in a timely rollout in Japan.
Bitcoin ETFs have surged in popularity globally, with numerous positive outcomes for investors. These financial products allow retail investors to trade Bitcoin through regular securities accounts without needing specialized crypto exchanges. This accessibility simplifies the investment process, eliminating the need for managing private keys and reducing the complexity associated with direct cryptocurrency investments. In just over six months, cumulative total inflows into spot Bitcoin ETFs in the U.S. have exceeded $16 billion, showcasing huge market demand and investor’s trust.
The new joint venture between SBI and Franklin Templeton is not limited to Bitcoin ETFs. It also plans to offer digital asset securities, leveraging Franklin Templeton’s early advancements in tokenization. This innovative approach uses blockchain technology to create tradable ownership tokens for assets such as real estate and government bonds. According to a forecast by Boston Consulting Group and ADDX, asset tokenization is expected to grow to a staggering $16.1 trillion by 2030, showcasing its immense potential.
SBI Holdings has been expanding its portfolio of alternative asset investment products through strategic international partnerships. In 2023, SBI formed alliances with the U.K.-based Man Group and U.S. private equity firm KKR, diversifying its offerings and catering to the growing demand for alternative investments. Additionally, SBI Securities, Japan’s largest online brokerage, established a wealth management office in July 2023 to attract high-net-worth clients.
The collaboration between SBI and Franklin Templeton is a pivotal step towards integrating traditional finance with cutting-edge digital asset management, paving the way for a new era of investment opportunities with the anticipated launch of Bitcoin ETFs and digital asset securities.
