Nomura’s Crypto Ballet: A Dance of Volatility and Vanity

Finance

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In a display of rhetorical acrobatics, Nomura Holdings rebuffs the notion that it is losing faith in crypto. The tighter risk controls at Laser Digital, they insist, are but a prudent measure to tame the short-term whims of the market while pursuing grander, more lofty strategies. So they told CoinDesk, with the air of a sage imparting wisdom.

“Given the nature of the crypto-asset business,” the bank intoned, “we recognize that a certain level of earnings volatility is as inevitable as the changing seasons. Yet, we also recognize the importance of a medium- to long-term perspective. To limit the capricious swings of fortune, we have further tightened position and risk limits. We shall continue to seize growth opportunities in the crypto market, all while fortifying our services and customer base.”

This clarification follows the musings of Nomura’s chief financial officer, Hiroyuki Moriuchi, who, during an earnings briefing, spoke of “stricter position management” at Laser Digital. A move, he assured, to reduce risk exposure and curb the earnings swings driven by the crypto market’s tempestuous nature. Alas, losses at the unit contributed to a 9.7% decline in Nomura’s fiscal third-quarter profit.

The bank’s strategic pivot comes as the crypto market endures a precipitous decline, its total value plummeting by nearly half a trillion since Jan. 29, according to CoinGecko’s chronicles. Bitcoin, once the darling of the digital realm, tumbled to its lowest ebb since President Donald Trump’s re-election in early November 2024, hitting a nadir of $72,870. Yet, like a phoenix, it rebounded to over $76,000, as CoinDesk’s records attest.

Nomura’s decision follows the Oct. 10 flash crash, a cataclysm that obliterated more than $19 billion in leveraged positions mere days after bitcoin ascended to a record high above $126,200. Bitcoin concluded the year at $87,000, a full 31% below its zenith, while the total crypto market capitalization also fell over 30% to just over $3 trillion.

With the dignity of a wounded lion, Nomura denies that this decision signifies a loss of faith in the sector. “Laser Digital’s risk controls performed as designed,” they declared. “Exposure was reduced early, losses were contained, and the firm avoided the more severe impacts felt worldwide.”

The banking behemoth, Japan’s largest investment bank with $673 billion in assets under management as of late last year, acknowledges that volatility is as intrinsic to the crypto business as breath is to life. “By nature of the digital asset business,” they opined, “Laser Digital and other industry peers have beta exposure to the market. However, risk taking at Laser Digital is at Trad-Fi institutional grade, and Q3 performance is not representative of any fundamental weakness.”