Japan's Largest Bitcoin Exchange Launches In Europe

While bitcoin traders spend sleepless nights, drenched in sweat whether South Korea will unexpectedly ban the trading of crypto currencies on the country's exchanges, sending the price of cryptos tumbling (it won't any time soon as it just prohibited anonymous accounts  while making real-name crypto trading mandatory, thereby confirming that no shutdown is imminent), what is really taking place is continued growth to meet rising global demand for crypto trading, and as the FT reports, BitFlyer, the Tokyo-based operator of one of the world’s largest bitcoin exchanges, is expanding in Europe after it was issued a Payment Institution license to operate in the European Union.

Yuzo Kano, the founder and CEO of bitFlyer, said in the press release,

“I am proud that we are now the most compliant virtual currency exchange in the world; this coveted regulatory status gives our customers, our company and the virtual currency industry as a whole a very positive future outlook.”

The exchange - which is one of the largest in the world with up to 30% of the global market and controls 80% of bitcoin trading in Japan - is launching its European service on Tuesday, after it received a license from Europe's financial regulator. BitFlyer’s arrival in Europe comes at a time when larger exchanges seek to legitimize a marketplace where investors, to date, have been afforded few protections despite the risk of extreme price volatility, hacks and service outages.

The company was granted a payment institution licence from Luxembourg’s Commission de Surveillance du Secteur Financier, meaning it will have to carry out anti-money laundering checks when signing up customers, as a bank would. It also secured a banking partnership with an unnamed European bank.

“We’re delighted that one of the most successful Japanese start-ups chose Luxembourg as their EU platform,” Pierre Gramegna, the country’s finance minister said on Tuesday.

Why the expansion? Simple: the platform, which allows users to store bitcoin and place complex trades, said it was responding to increased demand for cryptocurrency trading among professional and institutional investors. That audience is currently “underserved” in Europe, the company said.

According to its chief executive, Yuzo Kano, a former Goldman trader, BitFlyer is now the "most compliant virtual currency exchange in the world." Kano said that "approved regulatory status is fundamental to the long-term future of bitcoin and the virtual currency industry."

A harbinger of what the future of bitcoin trading looks like, BitFlyer - which also launched in the US in November - has become one of the largest cryptocurrency exchanges, raising $36m in venture capital funding, from blue-chip backers including Mitsubishi UFJ, Mizuho and Sumitomo Mitsui banks. In 2017, it facilitated more than $250 billion of cryptocurrency trading on its platform, of which more than half, or $150 billion, came in the final months of the year as prices surged.

Speaking to the FT last month, Kano said that soaring demand among Japanese investors for leveraged bitcoin trading, in particular, had driven prices higher. On its Tokyo platform, users are able to trade bitcoin proper as well as bitcoin derivatives with leverage of up to 15 times their cash deposits.

For now European traders won't have access to 15x leverage: the platform “won’t be offering leverage to start with but will be working with the regulator to discuss that in future”, said Andy Bryant, chief operating officer of the European division. Bryant added that the company would now be the only licensed European exchange offering cross-border trading with Japan, which he called “the deepest and largest market in the world

In the beginning, BitFlyer will only offer trading of bitcoin/euro pairs but said it planned to support other virtual currencies like Litecoin and Ethereum, and more fiat currencies in the coming months.