New Horizons in Digital Assets and Semiconductors
Saudi Aramco, the state-controlled energy firm, and Japan’s SBI have announced their plans to explore a potential collaboration focusing on digital assets and semiconductors. This move marks a significant step towards diversifying and expanding their respective digital asset portfolios.
SBI’s Expansion in the Middle East
SBI is set to establish “SBI Middle East” in Riyadh, which will serve as its operational base in the region. This follows SBI’s recent announcement of a $100 million joint fund with Standard Chartered based in Dubai. The company is positioning itself strategically in the Middle East to enhance its digital asset initiatives.
Co-Investment and Business Expansion Opportunities
SBI and Saudi Aramco are considering co-investing in each other’s digital assets portfolios. SBI, with a substantial digital asset portfolio, and Aramco, whose portfolio is also noteworthy, are looking to mutually leverage their resources. Additionally, SBI aims to identify Japanese digital asset startups interested in expanding into Saudi Arabia, providing necessary support in collaboration with Saudi Aramco.
Saudi Aramco: A Global Revenue Giant
Saudi Aramco stands as the world’s second-largest company in terms of revenue, generating $604 billion, closely trailing Walmart’s $605 billion in net sales for 2022. This financial stature underlines the potential impact of their venture into digital assets.
Tokenization vs. Cryptocurrency in Saudi Arabia
While Saudi Arabia might not be the first name that comes to mind regarding cryptocurrency in the Middle East, the country’s crypto activity is significant, with substantial year-on-year growth. Unlike other countries in the region with established crypto regulatory frameworks, Saudi Arabia currently lacks a dedicated crypto regulatory regime. However, recent developments, including the appointment of a crypto chief at the Saudi Central Bank (SAMA), indicate a warming attitude towards cryptocurrency and blockchain technology.
Focus on Digital Assets, Not Necessarily Cryptocurrency
Both SBI and Aramco have emphasized digital assets in their announcement, without explicitly mentioning cryptocurrency. This focus could hint at a stronger inclination towards tokenization, an area where SBI is notably active. SBI’s founding of the Osaka Digital Exchange (ODX), which will start trading tokenized securities, suggests potential opportunities for trading tokenized commodities like oil.
Saudi Aramco’s Blockchain Investments
Saudi Aramco’s blockchain ventures include investments in VAKT, a post-trade solution for the oil sector, and Data Gumbo, which focuses on operational efficiencies using blockchain. Additionally, the company has invested in TradeGo, an approved electronic bill of lading (eBL) provider, and other blockchain-based solutions such as IR4LAB and droppLabs.
Indirect Crypto Investments by Sanabil
Sanabil, a $3 billion fund owned by the government’s Public Investment Fund and an indirect investor in crypto, has commitments in several venture capital firms with significant crypto portfolios. These include Haun, Blockchain Capital, Andreessen Horowitz, Coatue, and Tiger Global.