Key facts
- SBI Holdings acquired Japanese crypto exchange Bitbank for $289 million.
- The deal is expected to accelerate consolidation in Japan's crypto market.
- New legislation will align crypto assets with securities regulation and lower capital gains tax.
- SBI's acquisition aims to build an integrated platform for trading, custody, tokenization, and payments.
- Bitbank holds 570 billion yen in assets under custody and nearly 1 million customer accounts.
SBI Holdings has acquired Japanese cryptocurrency exchange Bitbank for $289 million, a move that investment bank Architect Partners identifies as a significant step in the consolidation of Japan's digital asset market. The acquisition is driven by new regulations that are increasing the cost of operating standalone exchanges, making it more attractive for companies like SBI to acquire existing licensed entities.
This deal significantly expands SBI's crypto footprint, doubling its assets under custody to approximately 1.1 trillion yen and adding nearly one million customer accounts. It aligns with SBI's long-standing strategy of achieving scale through mergers and acquisitions, following previous integrations of other crypto businesses like TaoTao, DMM Bitcoin's customer accounts, and Bitpoint Japan.
Architect Partners highlighted that the acquisition is not solely about customer growth but also about acquiring a Financial Services Agency-licensed exchange, a deep altcoin liquidity pool, and an institutional custody business, Japan Digital Asset Trust. These assets would be far more costly and time-consuming to build internally.
The Japanese crypto industry is at a pivotal moment following legislation that will align crypto assets with securities regulation. This includes a lower tax rate on crypto gains and the potential for spot bitcoin, ether, and XRP exchange-traded funds, alongside stricter capital, custody, and disclosure requirements for exchanges. Architect Partners predicts these higher compliance costs will accelerate consolidation, potentially leading to the disappearance of up to half of the 27 registered exchanges.
Despite Bitbank reporting an operating loss and a revenue decrease in fiscal 2025, SBI agreed to a valuation of roughly eight times revenue, comparable to Coinbase's acquisition multiple for Deribit. This valuation underscores the strategic importance of acquiring a regulated market position over immediate profitability.
In conjunction with the acquisition, SBI announced further expansion of its digital asset strategy, including the distribution of Ripple's RLUSD stablecoin in Japan, a Visa-branded crypto rewards card, and a stablecoin payments initiative, signaling its ambition to create an integrated digital asset platform.