Japan’s Financial Services Agency approves first bitcoin exchanges

The Japanese Financial Services Agency (FSA) has released a list of the first 11 companies permitted to operate exchanges that trade fiat currencies against digital currencies such as bitcoin.

Since the Payment Services Act (which legalized digital currencies in Japan) went into effect in April this year, all companies trading fiat for cryptocurrencies were required to register as a ‘virtual currency exchange business’. The law was enacted with the provision of a 6-month grace period to give companies the opportunity to complete registration. Those operating digital currency exchanges before the introduction of the registration system were labeled ‘deemed operators’ and fell into a few different statuses. According to the Japanese financial publication Newspicks, 17 companies remain under review,12 have chosen to shut down at their own discretion and two have not applied for registration.

Prior to being officially registered, exchanges had to go through a rigorous vetting process, with the FSA particularly focused on cyber security, anti-money laundering, terrorist financing, user protection and data security. The agency will continue to monitor the status of each company even after registration. The first 11 companies are:

1. Money Partners — a foreign exchange trading service founded in 2005, serving both individual investors and institutions. The company trades bitcoin along with its foreign exchange currencies and was a major investor in Kraken during an April 2016 Series B funding round for the company. “The movements behind Bitcoin and Ethereum have grown too large to ignore,” says Taizen Okuyama, President of Money Partners Group.
2. Quoine — an exchange incorporated in Singapore, but which also has offices in Japan and Vietnam. On top of support for ten different fiat currencies, the exchange offers trading pairs for BTC, ETH, and BCH.
3. Bitflyer — Japan’s (and often the world’s) largest bitcoin exchange by volume, it offers trading between the yen and BTC, ETH, ETC, LTC, and BCH. The company claims over 800,000 users with a monthly trading volume of over 1.5 trillion yen. In August it expanded into the US. Bitflyer has enabled Japan’s leading electronics chain Bic Camera to accept bitcoin as payment and is currently working with Marui, Japan’s leading department store. To commemorate the new license, BitFlyer is giving 1,000 yen to 100 people who retweet the company’s twitter post on the subject.
4. Bit Bank Ltd — a cryptocurrency exchange trading BTC, ETH, XRP, LTC, MONA (monacoin), and BCH. It also offers many services including Bitbank Trade, a bitcoin futures exchange. The bourse provides leverage of up to 20 times the bitcoin FX (BTCFX). The company also runs a news media outlet, a blockchain university, and Bitbank for Broker which is a white-label cryptocurrency service for other businesses to launch their own digital currency exchanges.
5. SBI Virtual Currencies — not currently operating, SBI says it plans to list BTC and XRP for trade against the yen. Parent company SBI Group is one of the world’s largest integrated financial network groups and one of Asia’s largest venture capital institutions.
6. GMO Coin Co — a subsidiary of GMO Internet group, GMO Coin has been trading since June. The company offers BCH and ETH trades for yen, and a bitcoin wallet. GMO is already a household name in Japan for many of its internet related services, website hosting and development, and online video gaming.
7. Bittrade — a bitcoin exchange and wallet service operating since September 2016, Bittrade has also been approved for trading ETH, XRP, LTC, MONA, and BCH against the yen.
8. BTCbox — the first bitcoin exchange to open in Japan after the fall of MtGox (launching in March 2014) its customers trade BTC, ETH, BCH, and GAME.
9. BitPoint Japan — founded in March 2016, BitPoint trades BTC, ETH, XRP, LTC, and BCH against the yen and Korean won. The company has several interesting partnerships, such as one with Peach Aviation, the second-largest airline in the country, and another with Nippon Pay, the Japanese equivalent of Apple Pay. The company also does bitcoin-based remittances and provides bitcoin payment processing to over 100,000 merchant stores.
10. FISCO virtual currency exchange —  permits yen trading of BTC, MONA, BCH, and its own FSCC (Fisccoin). Parent company FISCO is a major Japanese financial analyst service, publicly traded and with an office on Wall Street. In August, the exchange issued the world’s first Bitcoin-denominated bonds.
11. Zaif exchange — providing private blockchain development services as well as the cryptocurrency exchange, the company has become well known for its Mijin blockchain project that it claims will allow financial institutions to massively reduce infrastructure costs. Zaif allows yen trading of BTC, MONA, BCH, ZAIF (Ziff), SJCX, XEM, and others based on the counterparty platform including PEPECASH and other counterparty assets. Its short-lived TV show ‘BitGirls’ was an Idol-formatted talent program, where a different coin was assigned to each contestant.

The new regulations have been generally well received by cryptocurrency trading companies. Yuzo Kanoui, head of BitFlyer has stated that he believes the approvals will give customers a sense of security while Tech Bureau’s CEO Takao Asayama says that the FSA regulation will serve to accelerate the growth of the virtual currency market in Japan.