54% of Japanese Investors Want to Invest in Crypto Products

Around 54% of Institutional investors hailing from Japan are positive about investing in digital assets. A recent report shared the statistics from Laser Digital, the subsidiary of Nomura Holdings. The survey results indicate that the majority of financial investors are planning to add digital assets to their investment portfolios during the next 3 years.

Researchers collected feedback from 547 investment advisors that are comprised of institutional investors, wealth managers, and public-serving firms.

The survey was designed to identify the stance of investment experts regarding digital currencies and list the challenges when considering investing in cryptocurrencies. About 54% of survey participants have expressed an interest in crypto investments for the upcoming three years.

The managers who voted in favor of cryptocurrency investments have stated that they are planning to invest or have a high probability of investing in cryptocurrencies.

The remaining portion of the respondents have claimed that they are not planning to invest in digital assets. On the other side, the positive respondents list reasons such as diversification as a plausible cause for investment in cryptocurrencies.

Pros and Cons of Digital Asset Investments

About 60% of survey respondents have cited a number of factors that make a strong case for investing in digital assets.

The biggest factor has been dubbed as portfolio diversification with others such as low correlation with assets, higher profits, inflation hedge, and 24/7 trading time. On the topic of allocation, most managers intend to invest from 2%-5% of their total portfolio.

The 25% of the survey participants with a positive stance on digital assets noted and exuded a positive outlook for digital assets in Japan. Researchers have also identified important points from investors who have already established their positions in digital assets or are conducting research.

Some of the factors attributed towards the growth of digital currencies are ETFs, lending services, investment trusts, and yield staking.

At the same time, about 50% of survey participants have talked about investing in the Web 3.0 industry sourced by VCs or directly. The inancial sector of Japan is also expecting revision of Limited Partnership Act (LPs). Such a scenario will allow firms with a LP structure the ability to add cryptocurrencies to their balance sheets and facilitate the investment process.

On the contrary, a number of investment managers have cited several barriers to entry such as high volatility, strict regulatory implications, and counterparty risks.

Nomura Holdings and GMO Group Collaborate on Japanese Stablecoin

Two Japanese firms Nomura Holdings and GMO Internet Group have recently signed a deal to issue a new stablecoin for Japanese investors. Laser Digital Holdings, the digital subsidiary of Nomura Holdings is also participating in the venture.

The firms intend to issue stablecoins that are backed by the Japanese Yen and United States Dollar and focus on regulatory implementation.

Role of Stablecoins in Financial Markets

CEO Kenatro Okuda recently spoke with journalists noting that stablecoins play an important role in financial markets. This venture will work on issuing, redeeming, and investment mechanism of a JPY/USD stablecoin.

He stated that this project will grant Japanese investors higher accessibility into digital assets. In 2022, the Japanese government issued a legislator to set up a focused regulatory framework for stablecoins.

The 2022 bill classified stablecoins as non-securities and allowed stablecoin issuers to file for registration with the Financial Services Agency (FSA) before listing tokenized fiat currencies at trading platforms. Based on the existing laws, only regulated money services providers, banks, and trusts are allowed to issue stablecoins in Japan.

During the last few months, the Financial Services Agency has cracked down against algorithmic stablecoins such as TerraUSD. The regulators have also issued public notifications to bar investors from investing.

However, regulators have deemed stablecoins backed by fiat currencies a safer investment. The collapse of TerraUSD was tumultuous on account of the absence of fiat reserves leading to creating a loss in billions of dollars.