New Ventures in the Land of the Rising Sun

On June 4, Coinbase, a heavyweight in the cryptocurrency exchange and wallet arena in the U.S., announced its ambitious plans to penetrate the Japanese market. You might say they are trying to dive headfirst into a pool already bustling with action—after all, Japan is a trailblazer when it comes to crypto, being one of the first nations to give Bitcoin the nod of approval.

Welcome to the Jungle: The CEO’s Big Shoes

Nao Kitazawa, a former banker who once navigated the financial labyrinth at Morgan Stanley, has been appointed as the head honcho of Coinbase’s Japanese branch. As he gears up for this new adventure, there’s a lot on his plate. The Japanese Financial Services Agency (FSA) is known for its scrutiny, especially after a series of high-profile scandals that left the sector reeling.

The FSA: Friend or Foe?

Japan’s FSA is a regulatory hawk, ensuring that all crypto exchanges are walking a narrow path of compliance. Following the infamous Coincheck hack where a whopping $532 million was made to disappear, the FSA is on high alert and not just giving out high-fives. Coinbase has promised to play nice, stating they plan to work closely with the FSA, an entity that has already hand-delivered regulatory ‘love letters’ to other exchanges for failing to manage risk properly.

Crypto Traders and Regulatory Fallout

As of March 2018, Japan boasted about 3.5 million crypto traders who, while not trading in ‘legal tender,’ happily use Bitcoin and its altcoin friends for payments. However, the route for exchanges wanting to set up shop is anything but straightforward, especially with new regulations rolling out faster than you can say “blockchain.” Many foreign players, like Binance, found the regulatory terrain too rocky and made a swift exit. 

Competition in Digital Currency: The Stakes Are High

With 16 registered exchanges, the competition is heating up faster than a bowl of ramen left on the stove. Industry leader SBI Holdings is no stranger to this game; they launched their bank-backed exchange ‘VCTRADE’ targeting the major players of the crypto world while touting XRP as their go-to remittance currency. Meanwhile, Coinbase will focus on mainstream digital currencies but will need to tread carefully to avoid stepping on any regulatory toes.