Nomura’s crypto arm seeks profit in two years in shakeout after FTX crisis

The unit, Ledger Digital, will leverage the backing of a Tokyo-based investment bank to win over institutional investors and plans to add 50 employees by March, said its chief executive, Jez Mohideen. It is now easier to hire talent and acquire assets at lower valuations, he said, adding that the firm has tightened risk management.

“The latest developments in the crypto market will present an opportunity for us as it will drive institutional investors towards digital-asset firms backed by traditional finance houses,” Mohideen said in an interview. “In terms of market volume, price volatility, we believe we can be profitable within two years.”

Nomura launched its digital-assets arm in September, one of the boldest moves in the sector yet by a global financial firm, amid a deep slide in crypto markets triggered by the bankruptcy of FTX last month .

Other lenders are also trying to make their mark on the industry. Singapore’s DBS Group Holdings Ltd is already offering digital currency trading to wealthy clients, while Goldman Sachs Group Inc plans to invest hundreds of millions of dollars in crypto firms, according to a report. JPMorgan Chase & Co. is exploring the use of blockchain for transactions such as collateral settlement.

“We cannot see this asset class based on market value,” said Mohideen, 49.

Nomura has made a “significant” multi-year capital commitment to Ledger Digital, Mohideen said. Japan’s largest brokerage named Steve Ashley, former head of trading and investment banking, as president of the digital-assets venture. Mohideen was previously Nomura’s chief digital officer of wholesale. Division, as well as co-head of global markets in Europe, the Middle East and Africa.

“Nomura is taking the digital-asset business very seriously,” said Mohideen, who previously worked at hedge fund Braven Howard Asset Management and has a PhD in Process Systems Engineering from Imperial College, London, according to his LinkedIn profile.

“The intent and vision of this unit is to become a significant revenue driver for the Nomura Group,” he said.

Ledger will have three business verticals: trading, asset management and a venture capital fund. Trading will be the unit’s “core engine” for generating revenue, while Ledger Digital Ventures will invest in early-stage startups and entrepreneurs who are developing institutional products and services in crypto. The fund aims to make 15 to 20 seed to Series A deals per investment. year globally.

Nomura’s increased interest in Comenu, a digital-asset custody venture it launched in 2018 with CoinShares and crypto security company Ledger.

risk management

He added that following the risks of interconnectedness and over-leveraging that dragged down many crypto firms over the past year, Ledger has added “additional filters” on its risk management to assess counterparty risk.

Crypto organizations including Three Arrows Capital, Celsius, BlockFi Inc and Voyager went bankrupt and many others are facing credit crunch. The 65% drop in the crypto market over the past year exposed leveraged bets and triggered margin calls.

Mohideen said Ledger is seeking a license for its trading and asset management business in Switzerland, where the firm is based, as well as in Dubai because of its clear and stable regulations. He added that at a later stage, the firm plans to venture into the US and Japan.

The text of this story is published from a wire agency feed without any modification.