financial services agency

Japanese Based Cryptocurrency Exchange BitFlyer Reports $6.9Million Loss in 2019

Tokyo based cryptocurrency exchange BitFlyer has reported a $6.9 million loss in profit for the company’s 2019 financial year. Japan is known to accommodate over 20 accredited cryptocurrency exchanges which are a testament to the importance of the country as a major hub for cryptocurrency and blockchain-related activities. The company recorded a decline in sales as well as a return on investment drawing from the firm’s business report.

The Emergence of BitFlyer

BitFlyer was founded in 2014 by a former Goldman Sachs trader Yuzo Kano. Yuzo Kano brought his wealth of experience from Goldman Sachs to establish the exchange in Japan which stood out as one of the more receptive countries in Asia for cryptocurrency-based activities. BitFlyer was started at the backdrop of Bitcoin’s sustained market value of $14,000.

The Company’s Trading Woes

The company suffered in its trading volume when Bitcoin lost its value towards the second half of 2019. This loss in trading volume compounded the regulatory stress the company started facing the Financial Services Agency in mid-2018. In its investigation, the financial services agency discovered that bitFlyer had a porous security and compliance system which can easily predispose it to hackers and as such unsafe for customer’s investment. In response to this, the company stopped accepting new customers to pay attention to improving their system and these reductions in the influx of new customers and the exit of those that needed better security for their funds led to the lower than expected sales as reported by the company.

Future Prospects

Every business has its downtime and bitFlyer is undergoing such as is peculiar to most successful businesses in play in the cryptosphere today. The company listed Ripple’s (XRP) and Basic Attention Token (BAT) from December 2019 to date. The resilience of the company to handle adversity is a laudable feat that will attract investors in the nearest future.

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Japan’s Financial Services Agency Has Officially Chosen a New Commissioner, Himono

Japan’s Financial Services Agency (FSA) confirmed its plans for hiring Ryozo Himino as the new commissioner of the financial watchdog group.

Watch Out for Himino

On July 20, the update was publicly announced and Himino was officially listed as the head of the watchdog group. The financial custodian was transferred internally and previously played a part in the security agency as International Financial Deputy Counselor. He was also the first Japanese Chairman of the Standing Committee of the Financial Stability Board.

Himino has big shoes to fill in his newly appointed role as the new commissioner, as his precedent is none other than Toshihide Endo, a commissioner that was described by Anthony “Pomp” Pompliano, the investment mogul and Bitcoin advocate, as “a big proponent of Bitcoin and Lightning Network.”

Himino, A Crypto Lover

It appears to seem that Himino is quite bullish when it comes to cryptocurrencies. He has been quite implicated in the industry. For example, he addressed Facebook’s virtual currency Libra and compared it to “an alarm clock”, because, in his opinion, the Facebook crypto has opened the eyes of financial regulators and Central Bank officials. Furthermore, the newly appointed watchdog has also been a key factor in introducing blockchain platform Blockstream’s co-founder Adam Back to a seminar at a G20 meeting, located in Fukuoka, Japan.

During that time, the FSA’s aim was to offer an opportunity for various stakeholders and world leaders to gather at the G20 summit and talk about blockchain’s potential to develop decentralized financial systems. The Financial Service Agency acknowledged Adam Back as a legendary cryptographer who wants to change the world using cryptography.

Japan Had Their Eye on Himino Since The Beginning

The former International Financial Deputy Counselor was previously named on July 7, as the Japanese government was highly considering him for the role of commissioner for the country’s FSA.

This is great news for Japan’s cryptocurrency evolution, as Himino has always been regarded as a leader that was sympathetic to this type of digital asset.

Japan's FSA Warns Binance and Others for Operating Without Registration

Japan’s Financial Services Agency (FSA) has issued a warning letter to several foreign cryptocurrency exchanges, including Binance, Bybit, MEXC Global and Bitget, for conducting business in the country without proper registration, violating the nation’s fund settlement laws. The FSA stated that the listed exchanges had breached Japan’s fund settlement regulations by conducting crypto asset exchange business without proper registration.

This action by the FSA follows a crackdown on unregistered crypto exchanges in the East Asian nation. In 2020, the FSA introduced new regulations requiring crypto exchanges to register with the agency and obtain a license to operate in Japan. However, the regulator clarified that the current list of unregistered traders may not accurately represent the current state of unregistered businesses.

The warning issued to Binance is significant, as it signifies that the cryptocurrency industry in Japan and other nations is facing greater regulatory scrutiny. Unregulated cryptocurrency exchanges pose risks such as fraud, money laundering, and market manipulation, which are concerning regulators more and more.

Although Japan is working on new regulations for the crypto and Web3 sectors, the country has not cracked down on the industry as hard as some other larger economies, such as the United States. However, the FSA’s actions show that it is taking steps to ensure that the cryptocurrency industry in Japan operates within a regulated framework.

Binance, one of the world’s largest cryptocurrency exchanges, has been facing regulatory pressure in various countries. The U.S. Commodity Futures Trading Commission (CFTC) recently sued Binance and its founder, Changpeng Zhao, for regulatory violations. The FSA also issued a formal warning letter to Binance for operating without necessary permissions back in 2021.

In conclusion, the warning letter issued by Japan’s FSA to several foreign cryptocurrency exchanges, including Binance, signifies that the industry is facing greater regulatory scrutiny. As the cryptocurrency industry continues to grow, it is essential for regulators to take steps to ensure that it operates within a regulated framework to mitigate risks and protect investors.

Crypto Exchange bitFlyer Implements Travel Rule for Crypto Asset Transfers

BitFlyer, a leading Japanese crypto asset exchange operator, announced the implementation of new regulations known as the travel rule, aimed at preventing criminal activities and enhancing security in the crypto industry. The company made this announcement on March 23, 2023, in line with updates to the Act on Prevention of Transfer of Criminal Proceeds and other relevant regulations.

Effective from Tuesday, May 30, 2023, around 15:00 JST, bitFlyer will begin implementing the travel rule for all corporate and individual customers who send and receive crypto assets through their services. The company will use the Travel Rule Universal Solution Technology (TRUST) to facilitate compliance with these regulations.

Currently, bitFlyer supports the travel rule solution for several crypto assets, including Bitcoin (BTC), Ethereum (ETH), and ERC-20 tokens such as BAT, LINK, MATIC, MKR, SHIB, and PLT. However, as of May 30, 2023, only the sending and receiving of BTC will be possible between bitFlyer and Coincheck. The availability of sending and receiving ETH and ERC-20 tokens will depend on the completion of Coincheck’s development.

Under the new regulations, customers can send crypto assets to exchange operators that can send and receive the legally required information notifications through TRUST. In Japan, the designated exchange operator is Coincheck, while outside Japan, customers can refer to the list of TRUST-compatible players provided on the Coinbase website. Additionally, customers can also send crypto assets to private wallets like MetaMask, which are not managed by exchange operators.

However, it should be noted that sending crypto assets to exchange operators registered with authorities in Japan or other legally designated countries and regions that cannot send and receive the legally required information notifications through TRUST is not supported.

BitFlyer emphasizes the importance of receiving crypto assets in compliance with the travel rule. Upon receiving crypto assets on their platform, bitFlyer will verify the notification information and may contact customers via email if clarification or additional information is required. Customers are advised to allocate sufficient time for the confirmation process and respond promptly to any communication from bitFlyer.

BitFlyer also mentions its commitment to improving customer convenience and may expand the travel rule solutions based on the practices of other crypto asset exchange operators. This implies that the methods for handling supported crypto asset transfers may be subject to change in the future.

The travel rule, a requirement put forth by the Financial Action Task Force (FATF) to combat money laundering and terrorist financing, mandates that exchange operators providing crypto asset transfers must provide specific information about the sender and recipient to the receiving exchange operator.

BitFlyer, as a crypto asset exchange operator and a type-1 financial instruments business, is dedicated to the development of the crypto asset and web3 industries. The company aims to provide a secure environment for customers to trade crypto assets and contribute to the further advancement of the crypto industry.

Customers are encouraged to refer to the provided references and resources for additional information about the travel rule, including the Japan Virtual and Crypto Assets Exchange Association (JVCEA) and the Financial Services Agency (FSA).

SBI Holdings to Launch Investment Fund for Emerging Companies like Web3, AI, and Metaverse Startups

SBI Commits to Bolstering Startups in Japan

SBI Holdings, a major financial conglomerate in Japan, has announced its plan to start operating an investment fund by the end of 2023, focusing on startups in sectors like Web3, artificial intelligence (AI), and the metaverse. As reported by Nikkei on November 8, 2023, this fund aims to bolster the burgeoning startup ecosystem in Japan.

The fund is expected to reach up to 100 billion yen, with individual investments ranging from several hundred million to a few billion yen. It aims to invest in 150 to 200 companies. SBI is drawing investment from major and regional banks in Japan, supporting the development of domestic startups.

Collaborative Funding from Major Financial Institutions

Significant financial players, including Sumitomo Mitsui Banking Corporation, Mizuho Bank, Nippon Life Insurance, and Daiwa Securities Group, have already committed over 50 billion yen. This level of venture capital (VC) funding is relatively rare in Japan, and an SBI representative emphasized to Nikkei the importance of having financially robust backers to nurture globally competitive startups.

Japan’s Current Landscape and Goals for Startups

Japan currently faces challenges in cultivating startups. In November 2022, under Prime Minister Kishida’s administration, the “Startup Development 5-Year Plan” was established, addressing the lower rates of new business openings and unicorn companies (privately held startups valued at over 100 billion yen) compared to the US and Europe.

The administration aims to implement “New Capitalism,” seeing startups as vital in transforming societal challenges into engines for sustainable economic growth. The 5-Year Plan sets a target to increase startup investment from 800 billion yen (as of 2022) to over 10 trillion yen by 2027. It also aims to establish Japan as Asia’s leading startup hub by creating 100 unicorns and 100,000 new startup companies.

Enhancing the Ecosystem for Web3

For startups, particularly in emerging fields like Web3, both financial support and a conducive environment are essential. The Japanese government recognizes the need for tax reforms pertinent to Web3 companies in its “New Capitalism Grand Design and Implementation Plan 2023 Revised Version.”

Corporate taxes for Web3 companies have been partially reformed in the fiscal year 2023, exempting self-issued cryptocurrencies from market value evaluation under certain conditions. Financial Services Agency and the Ministry of Economy, Trade and Industry are advocating for further reforms for third-party held cryptocurrencies in the fiscal year 2024 tax revisions. The final decision on these reforms by the Tax Commission is expected to be concluded by mid-December.

Understanding Web3

Web3, often termed as the “next generation of the internet,” is a decentralized network built on blockchain technology, encompassing elements like NFTs and cryptocurrencies. It marks a shift from the one-way information flow of the initial Internet (Web1) and the current centralized Internet (Web2).