Leading Japanese Forex broker buys Coinage exchange

With Coinage well down the path of registering as a crypto exchange in Japan, Money Partners Group is reported to have abandoned its earlier plan announced in March to set up a wholly-owned subsidiary designed to engage in the cryptocurrency exchange business.

Money Partners Group had focused on delivering cryptocurrency services by registering Money Partners—a wholly-owned subsidiary and a provider of foreign exchange and securities transaction services—as a cryptocurrency exchange. Apart from the cryptocurrency exchange business designed to provide settlement services, the subsidiary’s main focus would have capital gain-oriented trading and offering a wide range of blockchain technology-related services in the future.

However, there has been hesitancy from financial institutions (which are the company’s customers), to engage with businesses involved in cryptocurrency exchange operations, as they see cryptocurrencies as high risk overall. Thus Money Partners Group has not yet started the service due to the potential impact on its existing client base and has decided instead to engage in the crypto business by making COINAGE a consolidated subsidiary.

The move continues the trend in Japan of established main stream businesses entering the crypto business through acquisition or joint ventures – typified by leading online securities trading company Monex Group acquiring the Coincheck exchange last year, after it fell victim to a massive hack in January 2018

Bank of Japan cautiously optimistic

Meanwhile, the Bank of Japan has shown a willingness to promote financial and technological innovation at recent G20 meetings – with blockchain a hot topic for attendees. In a June 8th speech to a financial innovation seminar titled “Our Future in the Digital Age” Bank of Japan Governor Haruhiko Kuroda laid out some important factors around facilitating the sound expansion of decentralized financial ecosystems.

Governor Kuroda said that while financial and technological innovation increases the functions of the financial system, it also creates risks. He stated that a good way for mitigating those risks would be to view financial and economic activities as interactions within a system as well as among multiple systems. Using examples of portfolio insurance strategies on Black Monday and the recent global financial crisis, he said: “Historically, the financial system has carried risk-amplifying mechanisms in an insidious manner that would pose serious threats to the system as a whole. People realized their mistakes only after unexpected disasters took place.”

He said that new financial technologies were transforming the structure of the global financial system, but urged a cautious approach. “We should reap the benefits of innovation,” he said, “while carefully assessing the risks that build up unintentionally.”