TOKYO — Leading U.S. cryptocurrency dealer Coinbase plans to branch out into Japan soon, a move likely to bring down trading costs in one of the world’s most bustling crypto markets.
The six-year-old company — an unlisted “unicorn” worth over $1 billion — will apply to register with Japan’s Financial Services Agency as early as this year.
San Francisco-based Coinbase operates in more than 30 countries, boasts 20 million digital wallet holders, and counts Intercontinental Exchange, the owner of the New York Stock Exchange, among its investors. Most of its users are in the U.S.
Coinbase serves as both a money changer for bitcoin, Ethereum and other virtual currencies and a provider of a platform where investors can trade among themselves. It will use the same business model in Japan and seek to cater to both institutional and retail investors.
Coinbase’s Japanese unit will be headed by Nao Kitazawa, who served as chief operating officer of Money Design, a Tokyo-based robo-advisory startup.
Coinbase puts an emphasis on the security of its system, with engineers specializing in that field accounting for more than 5% of its workforce. Coinbase offers full insurance coverage for “hot wallets” — user accounts constantly connected to networks — against hacking.
Coinbase arrives at a sensitive time following January’s $530 million breachat Japanese crypto exchange operator Coincheck. The FSA responded with snap inspections of exchanges and punished several operators for lax security protocols.
Operators are incurring heavy costs to improve safeguards. Payward, a San Francisco startup that runs the bitcoin exchange platform Kraken, announced it will withdraw from Japan by the middle of this month. Hong Kong’s Binance received an FSA warning that it was operating in Japan without a license.
Yet Coinbase appears unfazed by these hurdles. The company expects its track record in security and investor safeguards to be strengths in the Japanese market, said a Coinbase executive.
Japan had about 3.5 million crytocurrency accounts as of March, according to the Japan Virtual Currency Exchange Association. Investors here trade more frequently than those in other markets, making Japan attractive for exchange operators.