The Funding: Why Japan's SBI Holdings is investing big in crypto

Over the past few weeks, Japan-based financial conglomerate SBI Holdings has made a series of major crypto investments. Earlier this week, it became the sole investor in Gauntlet's $125 million Series C and EDX Markets' $76 million Series C. Last month, it agreed to acquire Japanese crypto exchange Bitbank for nearly $289 million and, in February, a controlling stake in Singapore-based crypto exchange Coinhako. SBI also recently backed Digital Asset's $355 million funding round, Morpho's $175 million token round and Circle's $222 million token presale for its Arc blockchain, among several other investments. Last month, SBI launched JPYSC, Japan's first trust bank-backed yen stablecoin.

SBI is not new to crypto, having invested in the sector since 2016. But the pace of its recent activity stands out. Why is SBI investing so heavily in crypto now? What's behind these moves? And what do they say about traditional finance's interest in digital assets and institutional adoption?

Looking at the recent deals together, they point to a broader strategy centered on onchain finance.

"At SBI Group, we are driving the onchain transformation of the entire group and expanding our digital asset businesses as we endeavor to our next stage of growth," an SBI spokesperson told The Block. "In the onchain space, our goal is to provide a comprehensive range of functions — from exchanges to asset tokenization to market platforms. Our recent acquisitions, investments, and partnerships are all part of this group-wide strategy."

The spokesperson said the full-scale arrival of the "token economy" is "imminent" — an era in which every asset is tokenized and everything from trading and settlement to the execution of various contracts is completed on blockchain.

"SBI Group is working to establish itself as early as possible as a global leading company in the rapidly evolving digital asset space," the spokesperson said.

Joseph Goh, director and head of Asia Pacific at crypto investment banking and advisory firm Areta, said SBI is pursuing something few traditional financial groups have attempted.

"SBI is doing something no other financial group in Asia has attempted: building an end-to-end digital asset franchise spanning issuance, settlement, market infrastructure, asset management and retail distribution, and doing it across borders rather than just at home," Goh said.

He said one of the clearest themes is asset management. By combining Gauntlet's institutional onchain capabilities with the distribution SBI would control through Bitbank and Coinhako, "we have the makings of Asia's first at-scale onchain asset management business," Goh said. "The takeaway is that SBI is not buying exposure to crypto, it is buying the plumbing of the next financial system."

Settlement is another major focus, according to Goh. He pointed to SBI's JPYSC stablecoin launch, the distribution of USDC in Japan through its Circle joint venture, and SBI Shinsei Bank joining the JPMorgan-backed Partior blockchain network to issue tokenized deposits for cross-border payments.

"Whoever owns the yen leg of onchain settlement could own a strategic position in Asia's financial future, and SBI is assembling exactly that," Goh said.

Why now?

One reason is that Japan is overhauling its regulatory framework, shifting crypto from a payment tool into regulated financial instruments on par with stocks.

Last month, the lower house of Japan's parliament advanced a bill that would classify cryptocurrencies as financial instruments, paving the way for products such as exchange-traded funds while introducing stricter trading and disclosure rules. The legislation, which is expected to take effect next year after clearing the upper house, would also lower the maximum capital gains tax on crypto assets to 20% from the current 55%, in line with stocks and bonds, beginning in 2028.

Animoca Brands co-founder and executive chairman Yat Siu said SBI appears to be positioning itself ahead of those changes. Rather than waiting for greater regulatory clarity, he said the company is building capabilities across crypto so it is ready as digital asset adoption accelerates.

Siu and others also pointed to the current market environment. Quynh Ho, head of venture investment at GSR, and Mike Bucella, co-founder and managing partner at Neoclassic Capital, said bear markets often provide the best long-term investment opportunities because valuations are lower and competition for deals is less intense.

"If you are playing the long game, as SBI seems to be, you want to be in the market in cyclical troughs, as those deals will be incredibly valuable as the market cycle turns and the industry balloons over the next 10 years," Bucella said.

The SBI spokesperson said that the company looks for startups with innovative technology that is already being deployed in real-world services. Gauntlet's risk management and optimization technology is critical to onchain finance, while EDX Markets, as an institution-focused crypto exchange, helps traditional financial institutions enter the digital asset market, the spokesperson said. "Both provide functions that are indispensable to the broader adoption of digital assets that we are working toward," they added.

For Gauntlet, the relationship extends well beyond funding. "Distribution and market access, primarily," co-founder and CEO Tarun Chitra said when asked what strategic value SBI brings beyond capital. He said SBI's footprint across Japan and Asia will help Gauntlet expand its platform to financial institutions, fintechs and tokenization initiatives that it could not reach on its own, including extending its stablecoin coverage beyond U.S. dollar and euro-backed stablecoins to currencies such as the Japanese yen and Mexican peso.

EDX Markets sees similar strategic value. CEO Tony Acuña-Rohter said SBI's relationships across global financial services will support the company's efforts to expand its trading, clearing and settlement capabilities.

"We’re actively engaging with SBI’s broader digital asset ecosystem, including market makers, stablecoin initiatives, tokenization efforts and brokerages, as we explore opportunities to advance institutional market infrastructure together," Acuña-Rohter said.

Will others follow?

Most executives I spoke to expect more traditional financial institutions to make similar moves over the next few months and years, although the pace will likely depend on regulation and client demand in each market.

The shift is already underway, with recent onchain initiatives by TradFi giants, including Intercontinental Exchange, the owner of the New York Stock Exchange, Citi and Morgan Stanley.

"We expect institutions in jurisdictions with clearer rules to move first," Chitra said. "Brokerages and asset managers with large retail bases are the natural followers."

GSR's Ho also expects institutional activity to concentrate on areas with clear use cases, including stablecoins and payments, tokenized real-world assets, institutional trading infrastructure, prediction markets, treasury management, collateral optimization and onchain capital markets.

Notably, Animoca's Siu said he is already aware of some "large" crypto transactions being explored by traditional financial institutions and expects more to emerge as tokenization becomes a larger strategic priority across the industry.

"I would be expecting to see more and more large-type deals to emerge," Siu said, adding that he couldn't think of any major financial institutions that are not looking at crypto or digital assets "in some form or fashion."

Areta's Goh said the trend is becoming increasingly visible across Asia. He pointed to South Korea as the next market to watch, adding that diversified financial groups combining banking, securities and retail distribution are best positioned to follow SBI's playbook. Goh also said digital assets have become a strategic priority for banks, asset managers, exchanges and payments companies across the region, with stablecoins and payments leading institutional interest, followed by institutional trading, asset management and market infrastructure.

The risks

Despite the optimism, SBI's strategy is not without risks. Siu said much depends on how quickly regulatory frameworks continue to evolve and how fast institutional adoption of digital assets accelerates. If regulation takes longer than expected, the returns from investments being made today could also take longer to materialize.

"Execution is the real test," Goh said. He noted that SBI's acquisition strategy helps reduce some integration risk because both Bitbank and Coinhako operate regulated crypto exchanges, while the firm's minority investments carry relatively limited integration risk by design.

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