Abstract : Finally, the Financial Service Agency took action in the last month of the year. However, the profound changes that have happened for the past ten months have re-shaped the Japanese digital currency market into a tripartite domination. The probability of Coincheck's return to the Japanese market is almost zero.
On December 19, ChainDD reported that according to news released by Nikkei, the Japanese Financial Service Agency (FSA) will approve Coincheck to be a registered trader of cryptocurrencies, under the Fund Settlement Law. At the same time, the report stated that the number of companies that are waiting for approvals from the FSA is over 200, instead of over 100 as previous reported. Monex Group, the parent company of Coincheck emphasized that the news has not been verified. However, the company has verified that the FSA is reviewing Coincheck's application. Furthermore, Monex has promised that all updates concerning Coincheck will be published on the official website in a timely manner, if deemed necessary.
Toshihiko Katsuya, President of Monex and current CEO of Coincheck stated that, “in 2019, we expect new players to enter the virtual currency trading industry and the competition will be fiercer. However, we are optimistic about the demand for virtual currencies. The medium-term demand for virtual currencies will go up. In the past, virtual currencies were only regarded as a type of assets but stable virtual currencies anchored to fiat money are emerging. Demand for ,making remittances and payments using virtual currencies is also strengthening.”The statement is an indication of Monex future increase in its stakes in the digital currency market.
Earlier on, ChainDD learned that at the end of October, Coincheck began to accept new account registrations of Japanese clients. Coincheck has resumed all its digital currency trading services on its platform since November 26, after suffering a hacker attack in January this year. It has also attempted to resume services including its leveraged trading, Japanese Yen deposits in convenience stores and payments for electricity by its customers using cryptocurrencies.
Radical changes: emergence of numerous big players and tripartite domination
Since Coincheck's incident, 16 licensed exchanges have jointly founded “Japan Virtual Currency Exchange Association (JVCEA)”, the primary self-regulator of Japan's digital currency trade.
During this time, CEO of bitFlyer, which is temporarily ranked number one in Japan, left his post as Vice President of the association in humiliation and started exploring overseas markets such as America and Europe. In addition, Zaif, a top five exchange suffered theft on its platform and was taken over by FISCO, another licensed Japanese exchange. SBI has made inroads in the blockchain market aggressively. GMO and DMM are catching up as well. BitTrade、BitARG and BITOCEAN have sold their licenses.
Externally, while these 16 licensed exchanges are experiencing all kinds of problems, external forces are making inroads into the Japanese market, leaving the Japanese platforms in jeopardy.
Since Japan is the only country in the world that issues legal trading licenses, all large global trading exchanges are taking aggressive measures to enter the Japanese market, including frenetically applying for, buying and selling licenses, acquiring business stake with technology assets, and shell resource replacement. Many have failed, including not only Chinese startups, but also American, British and Singaporean platforms. On June 27, the market invasion attempt by several big international exchanges was foiled again by Japan.
At the end, several big players emerged victorious. Yahoo acquired BitARG and Madison Holdings acquired BITOCEAN's shares, with BITMEX as the real buyer behind the scene allegedly.
Besides battles with other exchanges, Coincheck also needs to fight for customers with big players in social APPs, such as LINE, who has joined the race after sensing opportunities. Motivated by the success of AliPay, Line, the largest Japanese and Korean social APP has launched its online payment system and started its effort to foray into the digital currency market in an aggressive manner. Furthermore, in October, the FSA established the “China Financial Research Association”, focusing on analysis of Chinese online payment and Fintech companies. Just as ChainDD analyzed before, AliPay is the biggest winner in this wave of blockchain frenzy.
Furthermore, how many regulation-violating platforms are making a fortune in silence? Coincheck is still facing too many worthy opponents. (This article was published on ChianDD Chinese, author Yuki.)