SBI

Crypto Biz: Worldcoin expands, Saudi Aramco considers digital assets, and more

Traditional financial firms are increasingly connecting services, portfolios and operations with digital assets.

Traditional financial firms are increasingly connecting services, portfolios and operations with digital assets, taking advantage of the crypto winter to build and find a market fit for crypto-related solutions.

Recent examples include Deutsche Bank’s asset management arm, DWS, which announced a new venture with Galaxy Digital and Flow Traders to jointly issue a euro-denominated stablecoin. In another development, oil company Saudi Aramco signed an agreement with financial services firm SBI Holdings about a possible collaboration on digital assets and co-investment in SBI’s digital asset portfolios.

Meanwhile, in the United Kingdom, pension fund M&G has invested $20 million in the country’s first regulated Bitcoin (BTC) derivatives exchange, Global Futures & Options Holdings.

Japan’s SBI looks to Saudi Aramco as it continues Middle East expansion

They have signed a memorandum of understanding on digital asset investment and semiconductor production.

Japanese financial services firm SBI Holdings and Saudi Arabian state-owned oil company Saudi Aramco are considering teaming up on digital asset investment and semiconductor production projects. The two signed a memorandum of understanding (MoU) on cooperation that includes the establishment of SBI Middle East in Riyadh as a base for operations in the region.

According to the MoU, signed Dec. 7, SBI and Saudi Aramco will consider collaborating in the field of digital assets and co-investing in their digital asset portfolios. They may identify Japanese digital asset startups that could be interested in expanding to Saudi Arabia and launch semiconductor production projects in both countries. In addition:

Saudi Aramco is the world’s second-largest corporation by revenue, after Walmart. The MoU mentioned Saudi Aramco investments aimed at complementing its supply chain. Cryptocurrency is “not recognized by legal entities” in Saudi Arabia, although the government has shown a healthy interest in Web3. SBI Holdings’ partnership with Taiwan-based Powerchip Semiconductor Manufacturing was also highlighted.

Japan’s SBI looks to Saudi Aramco to continue Middle East expansion

They have signed a memorandum of understanding on digital asset investment and semiconductor production.

Japanese financial services firm SBI Holdings and Saudi Arabian state-owned oil company Saudi Aramco are considering teaming up on digital asset investment and semiconductor production projects. The two signed a memorandum of understanding (MoU) on cooperation that includes establishing SBI Middle East in Riyadh as a base for regional operations.

According to the MoU, signed Dec. 7, SBI and Saudi Aramco will consider collaborating on digital assets and co-investing in their digital asset portfolios. They may identify Japanese digital asset startups that could be interested in expanding to Saudi Arabia and launch semiconductor production projects in both countries. In addition:

Ripple-based MoneyTap adopted by three Japanese banks

Japanese banks such as Yamaguchi, Momiji and Kitakyushu now support the MoneyTap P2P remittance service based on RippleNet.

Ripple-based payment system MoneyTap continues growing in Japan, with several local banks opening access to the application for their clients.

SBI Remit, the remittance-focused arm of the Japanese financial services conglomerate SBI Holdings, has added support of its mobile MoneyTap application to three local banks, including Yamaguchi Bank, Momiji Bank and Kitakyushu Bank, SBI Remit announced on April 17.

Yamaguchi is a major regional bank in Japan, featuring 156 branches and offices in Japan and four overseas locations. Kitakyushu Bank is a subsidiary of Yamaguchi Financial Group and has operated 24 branches since the start of the business.

The MoneyTap integration enables the Japanese regional banks to offer a peer-to-peer remittance service to their customers through a mobile application. In addition to the bank account number, the remittance service enables the online remittance function through a mobile phone number. The app also features online identity verification and biometric authentication, aiming to ensure high security for customers of Yamaguchi, Momiji and Kitakyushu.

As previously reported, SBI integrated the mobile MoneyTap settlement service in 2019, soon after launching MoneyTap in collaboration with the blockchain firm Ripple in October 2018. Based on Ripple’s blockchain solution RippleNet, the MoneyTap app is designed to enable instant domestic bank-to-bank transfers and P2P transfers for clients, initially supporting three Japanese banks, including SBI Sumishin Net Bank, Suruga Bank and Resona Bank.

In the announcement, SBI Remit reiterated that the firm merged with MoneyTap in September 2022, which allowed it to provide a next-generation financial infrastructure with high functionality and low cost.

SBI has emerged as a major partner of Ripple, supporting the company amid its ongoing legal battle with financial regulators in the United States. Morningstar, an SBI Group financial data subsidiary, said in 2021 it will continue its XRP (XRP) shareholder benefits program despite Ripple’s legal issues in the United States. SBI CEO Yoshitaka Kitao also said in 2021 that Japan was the most likely country for Ripple to move to if the company is eventually forced to leave the U.S. due to the tough regulatory environment.

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Singapore’s financial authority grants license to SBI’s digital asset arm

The firm planned to launch a digital asset securities platform in Singapore, as well as provide custody, capital markets products and corporate finance advisory services.

The Monetary Authority of Singapore, or MAS, has granted SBI Digital Markets, a subsidiary of the digital asset arm of Japan-based financial giant SBI Holdings, a license to conduct certain regulated activities in the country.

In a Thursday announcement, MAS said it had awarded SBI Digital Markets a Capital Markets Services license following the firm receiving in-principle approval in May. The firm, whose parent company offers digital asset custody and trading, will be providing custodial services, capital markets products and corporate finance advisory services in Singapore as a regulated business. It also plans to launch a digital asset securities platform.

“This is an exciting milestone for SBI Digital Markets, which will play a major part in SBI DAH’s core mission to re-imagine and transform capital markets and banking value chains through the deployment of digital technology,” said SBI Digital Asset Holdings CEO Fernando Luis Vázquez Cao.

SBI Digital Markets is a subsidiary of SBI Digital Asset Holdings, the digital asset arm of one of the largest financial institutions in Japan, SBI Holdings. The company recently ceased all mining operations in Russia due to the crypto winter and the country’s role in the war on Ukraine. SBI Holdings also reported in August that one of its investees, Clear Markets, received approval from the U.S. Commodity Futures Trading Commission to offer over-the-counter crypto derivatives products with a physical settlement.

As the principal financial regulator in Singapore, the MAS has the authority to grant licenses to companies aiming to offer crypto-related services to the country’s residents — the area is currently home to crypto exchange Crypto.com and the founder of the Terraform Labs, Do Kwon. Filecoin service provider RRMine Global announced on Tuesday that it planned to relocate its headquarters to Singapore in response to “tightened restrictions on cryptocurrency usage” in China.

Crypto licensing roundup: Learn about the most recent approvals in the industry

Here’s where cryptocurrency firms have received the most regulatory approvals and licenses over the past few weeks.

Cryptocurrency companies have been moving to improve compliance worldwide amid the bear market of 2022, with many platforms increasingly securing licenses and approvals.

As one may find it difficult to track all global regulatory milestones in crypto, Cointelegraph has picked up some of the latest compliance developments over the past couple of weeks.

Global crypto firms have recently been active in growing presence and compliance in North America, with exchanges like China-founded Huobi Tech entering Canada.

Huobi Technology Holdings announced on Tuesday that its subsidiary Hbit Technologies has successfully obtained a Money Services Business (MSB) license from the Financial Transactions and Reports Analysis Centre of Canada.

cuWith the new license, Huobi Tech is officially authorized to engage in regulated activities for foreign exchange, money transferring and virtual currencies dealing in Canada. The new compliance milestone came shortly after Hbit received the MSB license in the United States in July.

Binance.US, the American partner of Binance, another crypto exchange founded in China, has also been actively improving regulatory efforts in North America recently. On Thursday, the exchange received a Money Transmitter License from the Nevada Department of Business and Industry, Financial Institutions Division.

Nevada became the seventh jurisdiction where Binance.US secured the license in 2022, following West Virginia, Connecticut, Wyoming, Rhode Island, Idaho and Puerto Rico. Binance.US said it operates in 46 states and Puerto Rico, offering investment and trading for more than 120 cryptocurrencies.

Clear Markets, a crypto derivatives platform tied to the Japanese financial giant SBI, has secured major approval in the United State as well. Backed by SBI, Clear Markets received approval from the Commodity Futures Trading Commission in mid-August for over-the-counter crypto derivatives trading for its U.S. subsidiary Clear Markets North America.

Among other compliance developments in North America, major crypto exchange Crypto.com completed the Service Organization Control (SOC) 2 Type II Compliance audit on Tuesday. Developed by the American Institute of CPAs, the SOC 2 is an auditing procedure aiming to ensure the secure management of data and confidentiality. Previously, Crypto.com became one of 37 crypto exchanges to register with the United Kingdom’s Financial Conduct Authority.

Elsewhere in the world, Singapore-based crypto exchange Bhex.sg received the Standard Payment Institution license from the Monetary Authority of Singapore (MAS) on Friday. The MAS approval requires licensees to meet a high standard of compliance to protect consumers, enabling the exchange to offer digital payment token services in Singapore.

Other recent compliance developments also include Socios, a major fan token platform working in conjunction with the fan token cryptocurrency Chiliz. On Thursda, Socios secured regulatory approval as a service provider of virtual currencies and digital wallets for its fan engagement and rewards platform in Italy.

The recent compliance developments in the crypto industry mark yet another milestone in the global crypto regulatory landscape but international regulators are yet to come up with clear rules for crypto companies. Earlier this week, economists from the International Monetary Fund highlighted the need to establish clear guidelines on regulated financial institutions in Asia. Some experts believe that certain regulatory clarity could be detrimental to crypto though.

SBI lost 40% of hash rate after stopping mining in Russia: Data

After terminating mining operations in Russia’s mining-rich region of Siberia in February, SBI still continues running some mining activity in the country.

Japanese financial giant SBI Holdings has partly terminated cryptocurrency mining in Russia due to geopolitical uncertainty and the crypto winter.

SBI Holdings suspended mining operations in Russia’s crypto mining-rich region of Siberia, citing reasons like the Russia-Ukraine conflict and the ongoing bear market, Bloomberg reported on Thursday.

The Japanese online brokerage shut down the Siberian mining operations shortly after Russia started a military intervention in Ukraine on Feb. 24, a spokesperson for the firm reportedly said.

The termination contributed to SBI’s crypto asset business reporting a pretax loss of 9.7 billion yen ($71 million) in Q2 202. As a result, the Sumitomo Mitsui Financial Group-backed group recorded a 2.4 billion yen ($17.5 million) in net losses, reportedly posting its first quarterly loss in a decade.

The reports on SBI’s mining suspensions in Siberia correspond with the public mining information of SBI’s crypto mining subsidiary SBI Crypto. According to data from the blockchain explorer BTC.com, SBI Crypto’s mining hash rate plummeted about 40% from 5,600 petahashes per second (PH/S) in mid-February to 3,300 PH/S on Aug. 18, 2022.

*SBI Crypto’s six-month mining hash rate. Source: BTC.com*

After closing some Siberian mining operations, SBI is reportedly still running some mining activity in Russia, according to Bloomberg. SBI’s chief financial officer Hideyuki Katsuchi reportedly disclosed the company’s plan to sell crypto mining hardware and withdraw from the country completely earlier this week.

SBI has yet to decide when it will complete the withdrawal from Siberia, a spokesperson at SBI reportedly said. The company has no other crypto business in Russia, and plans to keep operating its Moscow-based commercial banking unit, SBI Bank.

As previously reported, Russia emerged as one of the world’s biggest crypto mining countries last year, becoming the third largest BTC hash rate producer after the United States and Kazakhstan. The country quickly lost its hash rate leadership as China returned to the top three mining nations in early 2022, while many miners opted to avoid operations in Russia due to geopolitical uncertainty.

In April 2022, the U.S. Treasury Department imposed sanctions on BitRiver, Russia’s largest crypto data center provider, which had been involved in major imports of crypto mining devices from other countries. Some U.S. mining companies like Compass Mining subsequently sought to liquidate $30 million in crypto mining hardware in Siberia to avoid sanctions.

SBI Group reports investee getting CFTC approval for OTC derivatives trading in US

Under the U.S. Commodity Exchange Act and CFTC regulations, derivatives exchanges must have approval to operate as a Designated Contract Market or a Swap Execution Facility.

The United States subsidiary of electronic trading platform developer Clear Markets has reportedly received approval from the Commodity Futures Trading Commission, or CFTC, to offer over-the-counter crypto derivatives products with physical settlement.

In a Tuesday notice, SBI Holdings — a stakeholder of Clear Markets — said the CFTC had approved the U.S. subsidiary operating a Swap Execution Facility, in which it plans to offer derivatives trading for U.S. dollar and Bitcoin (BTC) pairs. The Japan-based financial services company said its market maker planned to expand its trading partners in the United States following pilot transactions on Clear Markets.

SBI Holdings announced it had acquired a 12% stake in Clear Markets in August 2018, which it planned to increase in the future. At the time, the Japanese firm said the investment was aimed at creating a crypto derivatives trading platform catered toward institutional investors.

Under the Commodity Exchange Act and related CFTC regulations, derivatives exchanges — whether dealing with crypto or other assets — must have approval to operate as a Designated Contract Market or a Swap Execution Facility in the United States. According to the Fiscal Year 2023 budget request released in March, the CFTC was considering expanding its authority over financial products using crypto.

In May, a federal court ordered three co-founders of BitMEX to pay $30 million in civil monetary penalties for allegedly violating the CFTC’s conditions. Major investment bank Goldman Sachs has also reportedly been looking into breaking into crypto derivatives products through the U.S. subsidiary of cryptocurrency exchange FTX.

Cointelegraph reached out to the CFTC and Clear Markets, but did not receive a response at the time of publication.