Nomura Starts Offering Bitcoin Derivatives to Clients in Asia

Nomura Holdings Inc. has started offering Bitcoin derivatives to clients in Asia after institutional demand for cryptocurrency products increased “significantly” in the past two years.

Japan’s biggest brokerage is offering non-deliverable forwards and non-deliverable options settled in cash, and can now trade Bitcoin futures and options, Tim Albers, head of forex structuring in Asia ex-Japan, said in an interview.

Nomura carried out its first digital trade on CME Group Inc.’s platform this week with Cumberland DRW LLC, a market-maker in Bitcoin and other cryptocurrencies. That trade was made despite a recent meltdown in the crypto sector after the collapse of the TerraUSD stablecoin triggered a flight from many popular digital tokens.

“There has been significant volatility recently,” Albers said. “Once the dust settles, valuations will become more attractive for institutional clients. We’re pretty excited to get this off the ground” as the launch “marks the start of our journey into the space” for the global markets business.

Crypto Expansion

Nomura is tapping resources within its Singapore-based foreign exchange team and its wholesale digital office for the crypto expansion in its global markets division. The digital office was created in 2018 to identify and execute new technology-led revenue opportunities such as digital assets, artificial intelligence and to support its e-trading platforms. The brokerage plans to expand its trading capabilities across other global markets over time, said Albers, without disclosing details.

Nomura’s expansion comes as crypto firms face growing scrutiny from policymakers in the U.S., prompting some to hunt down less bureaucratic jurisdictions like Bermuda. Cryptocurrencies and other risky assets are also under pressure after the Federal Reserve and other central banks raised interest rates to fight inflation, creating an unfavorable environment for such assets.

“We expect the sector to mature over time, to become more regulated, which makes it more attractive for institutional investors,” Albers said. “As a result, volatility should reduce over time.”

Nomura in October agreed to a third party allocation of shares from Crypto Garage Inc., which offers blockchain related settlement services in Japan and overseas. Its digital asset custody venture Komainu, formed with partners Ledger and CoinShares, raised $25 million in capital in March 2021.

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