Japan's SBI in talks to set up cryptocurrency JV with foreign financial firms

TOKYO, Feb 15 (Reuters) - Japanese financial conglomerate SBI Holdings Inc is in talks with foreign financial firms to set up a cryptocurrency joint venture, its chief executive said, as the company aims to expand the business as a core pillar of profitability.

The comments by Yoshitaka Kitao, who founded the company in 1999, comes as cryptocurrencies such as bitcoin and ethereum have emerged as alternative investment targets, and global investors have warmed to the rapidly expanding market.

Speaking to Reuters on Friday, Kitao, 70, said that while investors once lived in the world where they invested in stocks or bonds, it’s not an “either-or situation” any more.

“Institutional investors, mainly hedge funds, have recently started investing in cryptocurrencies...Not just institutional investors but also Elon Musk has,” Kitao said.

Musk’s electric vehicle company Tesla Inc revealed earlier this month it had bought $1.5 billion of bitcoin.

Kitao said at least two deals were under discussion on establishing a joint venture business in cryptocurrency, but declined to elaborate on possible partners.

SBI, Japan’s biggest online brokerage, has been providing cryptocurrency trading services since 2018.

Aiming to expand its cryptocurrency portfolio, SBI last year bought local exchange Tao Tao and acquired a 90% stake in London-based cryptocurrency market maker B2C2. Pretax profit of its cryptocurrency business came in at 6.7 billion yen ($63.9 million) for the nine months through December, a 83% surge from the same period a year earlier.

“Definitely,” Kitao said, when asked whether the business would become one of SBI’s key earners. He also suggested he was considering large-scale mergers and acquisitions (M&A).

“To become number one in the world, our choice is buying a leading company or creating an alliance with major global companies,” he said. “Our M&A strategy will not be something like taking minority stakes in many companies.” ($1 = 104.9300 yen) (Editing by Jacqueline Wong)