Leading Japanese investment bank Nomura has made a significant foray into the world of digital assets with the launch of its Bitcoin Adoption Fund. The newly created fund aims to provide institutional investors direct exposure to bitcoin (BTC).
The Bitcoin Adoption Fund will be introduced by Nomura’s digital asset subsidiary, Laser Digital Asset Management, the company said in a press release.
It added that the fund would be the first in a series of digital adoption investment solutions planned by the firm.
Nomura is a financial services group and global investment bank based in Tokyo, Japan. The firm has over $500 billion in assets and a strong presence in brokerage services for prominent institutional investors, which makes its venture into the emerging crypto sector noteworthy.
Nomura’s Bitcoin Fund to Offer Long Exposure to Bitcoin
The Laser Digital Bitcoin Adoption Fund offers investors an opportunity for long-only exposure to bitcoin. A long trade typically refers to a position taken by an investor or trader with the expectation that the price of an asset will increase over time.
To ensure the security of the fund’s assets, Nomura has partnered with Komainu, a regulated custody provider. The Bitcoin Fund is a part of the Laser Digital Funds Segregated Portfolio Company, registered as a mutual fund in compliance with the Cayman Islands Regulatory Authority.
“Technology is a key driver of global economic growth and is transforming a large part of the economy from analog to digital,” Sebastien Guglietta, Head of Laser Digital Asset Management, said in a comment.
“Bitcoin is one of the enablers of this long-lasting transformational change, and long-term exposure to Bitcoin offers a solution to investors to capture this macro trend.”
Although the Bitcoin Adoption Fund is the first launched by Nomura and its digital asset arm, the investment banking giant has been actively involved in the digital asset ecosystem for some time.
In September 2022, Nomura established a digital asset venture capital arm to stay at the forefront of digital innovation. Additionally, Laser Digital, Nomura’s crypto-focused arm, obtained Dubai’s Virtual Asset Regulatory Authority (VARA) license earlier this year, enabling it to operate in the country.
Bitcoin Sees Growing Institutional Interest
Launching the long-only Bitcoin Adoption Fund in Japan coincides with a growing interest in bitcoin-based investment products from regulated and mainstream financial institutions. Specifically, there has been a sharp spike in institutional interest in spot bitcoin exchange-traded funds (ETFs) in the US.
The excitement follows BlackRock’s application to the SEC for a bitcoin-based ETF. Shortly after the filing, bitcoin’s dominance in the overall market capitalization of cryptocurrencies exceeded 50%, a level unseen in more than two years.
And that's just in the last week.
Institutions are preparing for currency devaluations while retail drools over 5.5% "risk… pic.twitter.com/DK6xtLMLMr
— Stack Hodler (@stackhodler) September 20, 2023
The SEC had previously rejected filings for spot bitcoin ETFs due to fraud and market manipulation concerns. To address these concerns, BlackRock aims to establish a cooperative agreement with Nasdaq, where the fund would be listed.
Optimism around the launch of a spot bitcoin ETF has further increased after the US Court of Appeals for the District of Columbia Circuit ruled in favor of Grayscale, ordering the SEC to set aside its earlier rejection of Grayscale’s application and reopen the review process. The court ruled that there was no justification for the SEC to allow Bitcoin futures-based ETFs but deny spot Bitcoin ETFs.
Following the ruling, JPMorgan analysts led by Nikolaos Panigirtzoglou wrote that Grayscale’s win implies that the SEC would have to retroactively withdraw its previous approval of futures-based Bitcoin ETFs to defend its denial of Grayscale’s proposal of converting its bitcoin trust into an ETF.
However, the analysts said such a move would be “very disruptive and embarrassing for the SEC” and appears unlikely. “It looks more likely that the SEC would be forced to approve the spot bitcoin ETF applications that are still pending from several asset managers, including that from Grayscale.”
Furthermore, back in June, EDX Markets, a digital asset exchange for accredited investors backed by Fidelity, Charles Schwab, and Citadel Securities, announced the successful launch of its digital asset market. The platform aims to enable trading of bitcoin and ethereum (ETH), among other cryptocurrencies while adopting the best practices of traditional exchanges.