SBI Holdings is making yet another significant foray into the cryptocurrency market. One of its units has set the ball rolling towards the emergence of a cryptocurrency derivatives trading market. If successful, this move will be a welcome development for virtual currency enthusiasts who yearn for greater liquidity and diverse trading options.
SBI Paving the Way for Cryptocurrency-based Derivatives Market
SBI Crypto Investment, a subsidiary of SBI Holdings yesterday (July 30, 2018) purchased a 12 percent stake in Clear Markets, an electronic trading company. Though details of the deal haven’t been published as at press time, the deal is reportedly worth $9 million (1 billion yen).
Clear Markets, based in Charlotte, North Carolina in the United States, deals in developing and operating electronic marketplaces as well as trading technologies. By investing in the company, SBI Crypto is hoping to create a derivatives trading platform, which should attract institutional investors into the market.
Price Volatility is Anathema to Institutional Investors
There is no denying the fact that virtual currencies are among one of the most exciting asset classes in the current market. However, their volatility serves as a significant deterrent against widespread adoption. In June and July 2018, Bitcoin declined 30 percent and gained another 30 percent.
With the ubiquitous wild price swings in the market, the creation of a cryptocurrency-based derivatives market seems to be a given. However, such a trading arena remains mostly undeveloped, leaving not enough avenues for big-money investors to hedge their risk. However, SBI in tandem with Clear Markets might be able to create a platform that allows family offices, hedge funds, and other big-time investors to trade virtual currency instruments comfortably.
SBI Betting Big on Cryptocurrency
The Tokyo-based financial services company is making significant investments in the cryptocurrency space with stakes in Bitflyer and CoolBitX. The former is a prominent cryptocurrency exchange platform while the latter is a wallet developer. Apart from a stake in Bitflyer, SBI also owns a cryptocurrency exchange platform – SBI Virtual Currencies.
Last week, Lancium Technologies announced an equity investment from SBI Holdings. Lancium is a data center and distributed computing company based in Canada. SBI plans to use its stake in the company to vastly improve the energy efficiency of its Bitcoin Cash mining operations. Lancium provides renewable energy to virtual currency mining facilities.