Quick take:
- The new subsidiary will help clients diversify into cryptocurrency, DeFi and NFTs.
- The subsidiary will have a staff of about 100 by the end of 2023.
- The company will be run by Nomura executives but will be hiring externally.
Japan’s biggest investment bank, Nomura, is to combine digital asset services under a single wholly-owned subsidiary, according to a report by Financial Times. The new subsidiary will help clients diversify into cryptocurrency, DeFi and NFTs.
According to people familiar with Nomura’s plans, the digital asset subsidiary will be run by Nomura executives but will hire externally. It plans to have a staff of about 100 by the end of 2023.
This comes despite recent volatility in the crypto market that raised concerns about the safety of crypto investments. Last week, Nomura executed its first Bitcoin futures and options trades on Chicago-based futures exchange, CME.
Nomura’s plans for a digital asset subsidiary have been in discussion for four years. The new subsidiary will allow the Japanese investment bank to compete with major global banks that offer crypto and digital asset services to institutional clients.
With the launch of the subsidiary, Nomura joins global financial institutions such as Goldman Sachs, Citigroup, Bank of New York Mellon to enter the cryptocurrency, NFT and DeFi space.
“If we don’t do this, then it’s going to be more difficult down the line to be competitive,” a Nomura executive told FT. The executive said that despite the uncertainties surrounding digital assets, failing to offer investment facilities to institutional clients would incur a high opportunity cost for the company.
Nomura executives added that interest from institutional clients remains strong and would continue to grow along with the market for crypto, NFTs and other digital assets, especially as way to diversify from more traditionally run portfolios.
“Any asset class at the moment that has discounted cash flow is all under huge stress in an inflationary environment. But I think . . . many managers will be looking and thinking about potentially allocating towards blockchain technology and blockchain opportunities,” the Nomura executive told FT.
The digital asset subsidiary has not yet been named. Nomura will initially transfer 15 employees to the new company, which will be headed by Jez Mohideen, Nomura’s current chief digital officer for its wholesale business.
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