Dividends represent a company’s distribution of the profit that is not being reinvested. Public companies have offered dividends to every shareholder for a long time now. It gives a sign of credibility, stability and growth. But who has thought about offering investors dividends in crypto?
A recent announcement made by MorningStar Japan, subsidiary of SBI Holdings, said that it will offer its investors dividends in XRP tokens. In their statement, they say every investor that holds a minimum of 100 shares will receive dividends in crypto of 30 XRP by the end of September. Let’s analyse what lead to this decision.
This decision is totally not random. SBI & Ripple have been collaborating for some time and they even have a joint venture: SBI Ripple Asia.
According to SBI Holdings’ website, they are “providing a next-generation payment platform powered by DLT (Distributed Ledger Technology) to financial institutions and remittance transfer providers in Asia”.
This might be a difficult situation in the case of most companies. Luckily, parent company SBI holdings also owns cryptocurrency exchange SBI VC Trade. Investors will have to open an account to be eligible for the dividend.
Of course, having an in-house solution for this move makes the entire logistics much easier.
The goal of SBI, through SBI Ripple Asia, is to bring blockchain technologies to the corporate mainstream. Considering this, distributing dividends in crypto to both personal and institutional investors is a smart business move. If this proves to work, the idea can scale to more companies part of the SBI Group.
It is good that a company such as SBI, which has an entire setup for this, made the first move. In other circumstances, it might have proved more difficult to implement something as ambitious as this. Therefore, by doing this, they are setting an example and other companies might follow-up shortly.
Anyhow, owning and distributing cryptocurrency is a lot easier than it was a few years ago. FinTech startups such as Coinbase and Revolut makes it easy for personal investors and there are some working for implementing B2B solutions for the corporate sector.
In the end, if this is implemented at a large scale, dividends in crypto might be a save for many companies that pay huge fees in order to be able to make dividend distribution possible. At this point, the higher development cost is a long-term investment for a possible big change in this area.
SBI is making a smart move, through SBI Ripple Asia and SBI VC Trade, in order to bring more companies to the conclusion that dividends in crypto is a profitable long-term investment. In the future, if this proves to be efficient, we might see a wave of companies shifting to distributing dividends in crypto.
Anyhow, if you want to add something, feel free to leave a comment below. If you want to get in touch with me personally, use this link.