(Bloomberg) -- Sumitomo Mitsui Trust Holdings Inc. is teaming up with a Japanese crypto firm to create a trust company to manage digital assets for institutional investors. 

The bank has signed a memorandum of understanding with crypto exchange operator bitbank inc. to offer custody services for public blockchain-based crypto assets, including NFTs. 

Custodian services are seen as crucial for the institutional adoption of bitcoin and other crypto assets as investment asset class. While growth in the US crypto market has been driven by institutional investors, Japan remains predominantly retail, according to bitbank Chief Executive Officer Noriyuki Hirosue.

“The biggest problem is that there is not a trustworthy digital custody service,” he said at a briefing Tuesday. “Given the past incidents, crypto companies do not enjoy public trust. We need cooperation of a major trust bank,” he added, referring to the large-scale theft of crypto assets at exchanges in Japan and overseas. 

Sumitomo Mitsui Trust is the second major Japanese financial institution after Nomura Holdings Inc. to announce its intention to enter the crypto custody services.

In October, Japan’s biggest brokerage and its joint venture Komainu agreed with Crypto Garage Inc. to explore providing digital asset custody services.

The trust company to be launched by Sumitomo Mitsui Trust and bitbank is pending regulatory approval to start operations, Hirosue said.

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