Nomura supports its cryptocurrency approach as it reduces short-term fluctuations at Laser Digital.

The Japanese bank indicated that tighter risk limits and positions at Laser Digital aim to mitigate short-term volatility rather than suggest a retreat from the cryptocurrency sector.

Nomura Holdings, based in Tokyo, reaffirms its recently outlined cryptocurrency strategy. (Photo by mako on Unsplash/Modified by CoinDesk)

What to know:

• Nomura Holdings stated that it remains dedicated to cryptocurrency and is implementing stricter risk and position limits at its Laser Digital division to mitigate short-term earnings fluctuations while seeking long-term expansion.
• This action comes after a third-quarter loss at Laser Digital, which contributed to a 9.7% decline in Nomura’s profit, following October’s flash crash that wiped out over $19 billion in leveraged cryptocurrency positions.
• Nomura highlighted that Laser Digital’s risk management measures functioned effectively during recent market disruptions and contended that its disappointing quarter reflects the inherent volatility of cryptocurrencies rather than any fundamental weakness or loss of trust in digital assets.

Nomura Holdings countered claims that it is losing faith in cryptocurrency, stating that the tightened risk controls at its Laser Digital unit are intended to limit short-term earning fluctuations while concentrating on long-term strategies, the bank communicated to CoinDesk through email on Wednesday.

“Considering the nature of the crypto-asset industry, we acknowledge that a degree of earnings volatility is unavoidable, and we understand the significance of maintaining a medium- to long-term outlook,” the bank remarked. “Simultaneously, in order to reduce short-term earnings variability, we have implemented stricter position and risk limits. We will continue to seize growth opportunities in the cryptocurrency sector while enhancing our services and customer base.”

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The clarification follows remarks from Nomura’s chief financial officer, Hiroyuki Moriuchi, who indicated during an earnings call that the firm has instituted “stricter position management” at Laser Digital to decrease risk exposure and limit earnings fluctuations resulting from cryptocurrency market volatility. Losses at this unit contributed to a 9.7% reduction in Nomura’s fiscal third-quarter profit.

The bank’s strategic adjustment occurs as the cryptocurrency market faces a significant downturn, with total value decreasing by nearly half a trillion since January 29, based on CoinGecko data. Bitcoin fell to its lowest point since President Donald Trump’s re-election in early November 2024 on Tuesday, reaching a low of $72,870 before rebounding to over $76,000, according to CoinDesk data.

Nomura’s choice follows the flash crash on October 10, which eliminated more than $19 billion in leveraged positions just days after Bitcoin reached a record high exceeding $126,200. Bitcoin concluded the year around $87,000, approximately 31% below its peak, while the total cryptocurrency market capitalization also dropped over 30% to just above $3 trillion.

Nomura denied that the decision indicates a loss of confidence in the sector. “Laser Digital’s risk management systems performed as intended: exposure was curtailed early, losses were contained, and the firm avoided the more severe effects experienced worldwide,” it stated.

The financial institution, recognized as Japan’s largest investment bank, with $673 billion in assets under management as of late last year, acknowledged that volatility is an unavoidable aspect of the cryptocurrency industry.

“Due to the nature of the digital asset sector, Laser Digital and its industry counterparts have beta exposure to the market,” the bank informed CoinDesk. “However, risk-taking at Laser Digital adheres to institutional-grade standards, and Q3 performance does not reflect any fundamental weaknesses.”