Nomura Launches First-Ever Bitcoin Derivatives Amid Crypto Turmoil

Japanese investment firm Namura announced Friday that it has launched crypto derivatives to Asian clients in Singapore, marking its move into the crypto industry amid a market crash.

Nomura Holdings Inc., a Japanese financial holding company, started offering crypto derivative contracts to clients in Asia, following the high demand for cryptocurrency assets in the last two years. 

Over-the-Counter Bitcoin Derivatives and Options

According to reports, the company has introduced its first-ever Bitcoin (BTC) over-the-counter derivatives, including non-deliverable forwards and options, for clients in Singapore. This makes it a bold move by a traditional financial brokerage firm into the crypto sector, even as markets are collapsing.

Rig Karkhanis, Nomura’s Head of Markets, said: “The trades, carried out on the CME by crypto investment firm Cumberland DRW on Friday, were Nomura’s first-ever crypto asset trades.”

“Working with international rivals will allow the assets to grow to meet our clients’ ever-growing requirements,” he added. Multiple global investment firms have been trying incessantly to offer more derivatives and other crypto services to their clients. These efforts come in response to pressure from financial institutions and clients for exposure to what has been a rapidly evolving cryptocurrency market.

In the last two years, the world has seen financial institutions meet the client demand and start trading crypto, though without touching spot markets. For example, companies such as Goldman Sachs (GS) and JP Morgan have already made efforts in giving individual clients a way to access the cryptocurrency market. Moreover, Goldman Sachs also facilitated its first crypto-backed loan a few days back to Coinbase Global, a major crypto exchange platform. The company announced using BTC as collateral for loans in USD.

Karkhanis added that these options enable crypto investors “to trade volatility directly and protect against downside risks.”

Crypto Tokens During a Market-Wide Pullback

The crypto market has collapsed in the last two weeks following a dramatic collapse of TerraUSD, one of the world’s major stablecoins (LUNA stablecoin) and the DeFi network. This turmoil threw crypto tokens into a breakdown, which had already fallen prey to a series of risky investments. The cryptocurrency market valuation has declined by approximately 30% this week. For example, the market capitalization of one of the biggest cryptocurrencies, Bitcoin, fell to its lowest at $25,401.05 since December 2020. What was once regarded as a tool to transform and revolutionize the financial landscape is now dwindling downside.

This widespread collapse has sent all other cryptocurrencies into a downtrend, which has raised serious concerns among crypto investors regarding economic and financial stability.

Scottie Sui, the Investment Director of Axion Global Asset Management, said: “The worst is yet to come. I think the market will decline more in the coming days. I think what we need to do is see the open interest collapse, so the investors stay out of it, and that’s when the market will gain a little stability.” Axion Global Asset Management is a Chinese company that specializes in crypto index funds.

Paul Kremsky, Cumberland DRW’s Head of Relationship Management, said: “Crypto-assets have rapidly evolved from a niche sector into a $1.5 trillion market. However, many investors still don’t have an avenue to get access to the market.”

Nomura Holdings Inc. was one of the very first banks to examine crypto asset custody, thereby joining the Komainu custody joint venture with investment firm CoinShares and custody specialist Ledger, back in June 2020. In the same year, the Nomura Research Institute — Nomura’s economic consultancy branch — developed a cryptocurrency asset index that tracks the current scenario of the Japanese cryptocurrency market.