Monex: Cryptocurrency exchanges should be like banks

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TOKYO – Monex Group, Inc. chief executive said that cryptocurrency exchanges in Japan should be regulated more like banks because they hold investors’ assets while offering trading platforms.

Monex, Japan’s No.3 online brokerage, fully acquired on Monday the 3.6 billion yen ($33.6 million) Coincheck Inc in the most important move made by a major financial company into Japan’s crypto sector, following the hit by a $530 million digital money heist.

Similar to a majority of Japan’s other cryptocurrency exchanges, Coincheck keeps customers’ assets as well as “matching” those who want to venture trading digital money.

CEO Oki Matsumoto told Reuters in an interview said that Japan’s exchanges do both matching and custodial services. “They’re close to a bank,” he said. “To someone in the financial industry like myself, common sense that regulations will get stricter.”
Thirty-two cryptocurrency exchanges are currently operating in Japan. Last year rules were set down requiring exchanges to keep customers and company assets separate. However, the practice has not been clearly defined.

At online brokerages, the dividing of assets is strictly enforced, as cash and stocks of customers are kept at third-party custodians such as trust banks.

Using Coincheck’s strong trading platform and customer base as a launch pad into a sector whose fast growth has attracted the attention of other firms. Purchase of Coincheck by Monex allows its introduction to the cryptocurrency industry.

Yahoo Japan said last week of its plans to purchase it a stake in a Tokyo-based cryptocurrency exchange. Line Corp, a messaging app operator, is also looking to planning to enter the market while Monex’s larger rival competitor SBI Holdings Inc already has a license to run an exchange but has not yet started its operations.

Over half of worldwide bitcoin trades over the last 24 hours were accounted for yen-based trades, according to data from cryptocompare.com.

As of last month, data shows that 3.5 million Japanese trade digital money, with most of the 20-40 year old age bracket covered by financial firms as the country’s population depletes and ages.

There has also been a positive reaction to the gamble by Matsumoto, who held an account with Coincheck for three years before the exchange was hacked.

Shares with Monex show a 66 percent increase since its announcement of plans to buy Coincheck, reaching their peak in a decade.

Still, Matsumoto, who also mines cryptocurrencies, said few major companies would have shown interest in the Coincheck deal.

“I don’t think there would have been many firms ready to do so,” he said. “It’s an issue for management.”

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