New SBI presentation: SBIVC to go live after regulation amendments, Ripple-Money Tap investment being considered

A new SBI Holdings, Inc. presentation was uploaded on the SBI website on April 26, 2019. The presentation presented the Financial Results for the Fiscal Year that Ended on March 31, 2019. This is the video of the SBI shareholders meeting. Unfortunately its in Japanese.

As usual, SBI presentations contain quite a bit information regarding Ripple, R3 and SBI’s digital asset plans.

SBI Virtual Currencies:

SBI Virtual Currencies has achieved a Full-year Profitability in the Initial Launch Year, by Thoroughly Utilizing Group Synergies. SBIVC has made a profit of approximately 360 million JPY (before income tax expense) which equals to 3.22 million USD.

The presentation explains that the scheduled start date was changed from March 2019 to July 2019 in order to comply with various regulations under the new law and to introduce private clouds to enhance security.

New listings are decided upon internal rules including:
• Market cap. of more than 500bn. JPY (small-size currencies are under
risk of fraudulent transactions by 51% attack) which equals to 4.48bn. USD.
• Does not have prospects of noxious hard-forks
• Other factors including liquidity, safety and profitability

Moreover, SBI plans to engage as a Group upon provision of leverage trading (OTC derivatives trading) service.

All these services by SBI Virtual Currencies will Begin Immediately after Changes of Crypto-asset-related Laws and Regulations.

I believe that the changes SBI is referring to is a bill that was submitted on March 15th, 2019 by The Japanese Financial Services Agency (“FSA”), Japan’s primary financial regulator, to the Diet (Japan’s national legislature) to amend both the Payment Services Act (the “PSA”) and the Financial Instruments and Exchange Act (the “FIEA”) relating to how the purchase and sale of cryptocurrencies is regulated in Japan (the “Proposed Amendment”).

In an article written by Katsuhiko Fujihira and Seth M. Graham on Mondaq, it is stated that:

“the current session of the Diet ends on June 28, 2019, and a schedule for the discussions on the Proposed Amendment is as yet unknown. However, it would be prudent to expect that the bill will likely be passed by the Diet without substantial changes in the next several months absent unexpected circumstances, given the widespread support in the market now for enhancing regulation of cryptocurrencies.”

Moreover, in the upcoming G20 summit that will be held in Osaka, Japan, on June 28 and 29, Japan has prepared a “manual” of cryptocurrency regulation proposals that it will hand out to G20 leaders and international financial chiefs.

Money Tap

Consumer-focused blockchain money transfer app built by SBI Holdings and Ripple has transitioned into a company in March 2019. SBI expects that by providing Money Tap solutions to as many financial institutions as possible at a low cost, will dramatically improve customer benefits.

13 banks have invested in the new company: Ehime Bank, Kiraboshi Bank, TheKeiyoBank. The San-In Godo Bank, Shiga Bank, The Shimizu Bank, Shinsei Bank, SBI Sumishin Net Bank, Suruga Bank, Seven Bank, The Hiroshima Bank, The Fukui Bank and The Hokuriku Bank. At a stage where the acceptance of investments from domestic financial institutions has been completed, Money Tap will now consider accepting an investment from U.S. Ripple, in order to strengthen technical cooperation and the promotion of initiatives related to international remittances.

Money Tap advantages:

  • Can easily transfer money between one’s bank accounts, which has been done at ATMs up until now.
  • High external safety and reliability, owing to the banks being the main players.
  • Business scalability owing to banking license, including payroll and FX transfers.
  • Low structural cost since there is no need to charge or make account transfers.
  • Settlement network utilizing Ripple’s DLT “xCurrent” that does not require high maintenance costs, as with CAFIS.
  • Providing low-cost payment network 24/365 will significantly reduce payments by cash, which will save costs for banks by eliminating the need for ATMs.
  • No fee policy for small amount remittances (depending on the policy of each interconnecting bank).
  • Money Tap enables direct money transfers to a bank account even if the counterpart does not have the app.
  • Eliminates 3 difficulties (0 initial cost, deposits will be settled as soon as the next day and the payment fees will be low ~ 0.5%)
  • of card payments for the merchants, and benefits SMEs through a cashless process. QR Code Merchant Payment Services Starting from 2019 and will be promoted.

Ripple – R3

SBI has invested both in Ripple and R3.

With Ripple, SBI Ripple Asia was established in May 2016. MoneyTap was created.

With R3, SBI R3 Japan was established in January 2019. The Corda Training Program has been running since November 2017.

After President Kitao’s keynote talk at R3’s CordaCon in Tokyo in March 2018 where he declared full-scale efforts to resolving the R3–Ripple legal
dispute, developing financial services for use with Corda and to leverage XRP using Corda:
September 10, 2018
• Settlement announced between R3 and Ripple.
December 5, 2018
• R3 releases XRP Settler that makes full use of XRP Ledger.
January 29, 2019
• Joint venture announced between SBI Holdings and R3.

The R3–Ripple solution has high potential to become a global
standard for financial operations such as international money transfers and trade finance.

Promoting Utilization of Corda and XRP Utilization of R3’s Corda Global settlements application “Corda Settler”:
• Corda Network, launched in 2019, will allow application of smoother transfer of data and digital assets by connected banks and fintech companies.
• XRP, as the first crypto-asset supported by Corda Settler, demonstrates a high affinity with Corda.
• Preparing transition of S Coin platform to a highly convenient global platform through the introduction of Corda Settler Future expansion.
• Expanding the range of use and planning for adoption at Expo 2025 in Osaka, which will draw in people from around the world.