As a seasoned financial analyst with over two decades of experience in the investment industry, I have witnessed the evolution of digital assets and their growing significance in the global financial market. The recent announcement by SBI Holdings and Franklin Templeton about their joint venture to explore the investment environment for spot Bitcoin ETFs in Japan has piqued my interest due to its potential implications for Japanese investors and the broader digital asset ecosystem.
A report from Nikkei states that SBI Holdings, a well-known Japanese financial firm, intends to form a partnership with Franklin Templeton, an esteemed American investment management company, by the year’s end. The primary objective of this joint venture is to investigate the potential for Bitcoin spot ETFs in Japan. This collaboration could potentially pave the way for a Bitcoin spot ETF in the US market as well, and might bring new prospects for an XRP Exchange Traded Fund (ETF) in the United States.
Franklin Templeton, renowned for its diverse selection of mutual funds and exchange-traded funds, will hold a 49% ownership share in the newly established company. In contrast, SBI Holdings will claim a dominant position with a 51% stake. This strategic partnership arises amidst the escalating demand for spot Bitcoin ETFs following the US Securities and Exchange Commission (SEC)’s approval of 11 such exchange-traded funds earlier in 2021 on January 11.
As an analyst, I find it remarkable that the partnership between Bitcoin ETF providers and Japanese institutions is garnering significant attention. The potential tax benefits for Japanese investors if they can trade Bitcoin ETFs on our domestic securities market is a major draw. SBI Holdings, a prominent Japanese financial services company, has disclosed receiving “numerous requests” from local customers seeking to engage in such transactions.
The context involves a significant difference in taxation between physical Bitcoins, which are subject to an estimated 55% tax, and Bitcoin ETFs, which would be taxed at a lower capital gains rate of 20.315%, according to Coinpost, a Japanese news outlet. Additionally, the classification of Bitcoin ETFs as “transfer income” grants investors the ability to carry forward losses and combine gains and losses, potentially leading to reduced overall tax liabilities.
Why A Spot XRP ETF Became More Likely
Amid the ongoing advancements, there’s growing interest in the prospect of an XRP exchange-traded fund (ETF). SBI Holdings, a strong supporter of Ripple Labs, has played a key role in championing Ripple’s blockchain technology in Asia through their collaborative venture, SBI Ripple Asia. Founded in 2016, this alliance aims to improve cross-border payment solutions by leveraging Ripple’s technology.
Significantly, SBI Holdings has shown strong backing for XRP, recognizing its capability to facilitate swift and affordable cross-border transactions. In 2018, SBI Ripple Asia spearheaded the establishment of a consortium comprising several Japanese banks to utilize Ripple’s technologies for both domestic and international payments.
Throughout the ongoing legal disputes between Ripple and the SEC, SBI’s CEO, Yoshitaka Kitao, has consistently expressed his backing for Ripple’s technology. In June, Kitao stated, “Should the decision be that XRP is deemed a coin, I believe its value will significantly increase. If the court ruling turns out favorably, I am confident the company leadership will pursue an initial public offering (IPO) promptly.”
The latest news does not directly refer to an XRP ETF at location X, but the strong partnership between SBI Holdings and Ripple Labs might facilitate the creation of such a product in the coming months. With the green light given for spot Bitcoin and Ethereum ETFs in the US, a potential XRP ETF could represent a gamble on Donald Trump’s victory in the November presidential election. Considering VanEck and 21Shares’ intentions to launch Solana ETFs this June, it is not far-fetched for SBI Holdings to pursue a similar strategy for an XRP ETF.
At press time, XRP traded at $0.6137.
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2024-07-26 01:11