According to a report by Nikkei, SBI Holdings will establish a joint venture with Franklin Templeton, a leading American asset management firm, by the end of this year. The joint venture is aimed at exploring the investment environment for spot Bitcoin ETFs in Japan and could be a new hope for a spot XRP exchange-traded fund (ETF) in the United States.
Franklin Templeton, known for its range of mutual funds and exchange-traded funds, will own 49% of the new company, while SBI Holdings will have a majority stake of 51%. This joint venture comes amid growing interest in spot BTC ETFs following the approval of 11 Bitcoin-focused ETFs by the U.S. Securities and Exchange Commission (SEC) earlier this year on January 11.
The partnership is particularly notable for the potential tax benefits for Japanese investors if Bitcoin ETFs can be traded on the domestic securities market. SBI Holdings revealed that it has received “many requests” from Japanese clients.
The background to this could be that physical Bitcoin is currently subject to a tax rate of around 55%, while a spot Bitcoin ETF would only be taxed at 20.315% on capital gains, as reported by Japanese news outlet Coinpost. Additionally, treating Bitcoin ETFs as “transfer income” would allow for loss carryover and the aggregation of gains and losses, potentially giving investors lower tax bills.
Why a Spot XRP ETF Became More Likely
Amid these developments, the spotlight is also turning to the possibility of a spot XRP ETF. SBI Holdings, a longtime ally of Ripple Labs, has been instrumental in promoting Ripple’s blockchain technology in Asia through their joint venture, SBI Ripple Asiafounded in 2016. This collaboration aims to improve cross-border payment systems using Ripple’s technology.
Notably, SBI Holdings is also a major supporter of XRP, recognizing its potential to facilitate fast and cost-effective international transactions. In 2018, SBI Ripple Asia led the creation of a consortium with several Japanese banks to leverage Ripple’s technologies for domestic and international payments.
Amid Ripple’s ongoing legal challenges with the SEC, SBI’s CEO Yoshitaka Kitao has been an outspoken supporter of Ripple’s technology. In June, Kitao comment given“If the conclusion is reached and XRP is a coin, I think it will be a very expensive price. If the conclusion (of the trial) is positive, I think management will go public immediately.”
While the recent announcement doesn’t explicitly mention a spot XRP ETF, the long-standing and deep relationship between SBI Holdings and Ripple Labs could potentially pave the way for such an ETF in the future. Following the approval of spot Bitcoin and Ethereum ETFs in the US, the introduction of a spot XRP ETF a bet on donald trump winning the US presidential election in November. Given the recent submissions by VanEck and 21Shares to launch spot Solana ETFs in June, a similar initiative for a spot XRP ETF by SBI Holdings is not out of the question.
At the time of writing, XRP was trading at $0.6137.
Main image created with DALL·E, chart from TradingView.com