Posts by Blumit

    Proposed License Requirements End Anonymous Crypto Selling and Buying in the Netherlands


    Pete Hoekstra, the Netherlands’ Minister of Finance, has received official advice that a licensing system should be introduced for crypto services, Dutch media outlet Nederlandse Omroep Stichting (NOS) reports on Jan. 18.

    Hoekstra reportedly requested advice about cryptocurrencies from the Netherlands’ Authority for the Financial Markets and the local central bank, De Nederlandsche Bank, at the beginning of last year.

    The minister announced that he started working in accordance with the advice immediately after receiving it. According to the article, the decreased crypto speculative mania has made investor protection actions less urgent. As a consequence of this lesser urgency, the emphasis is purportedly being placed on the prevention of money laundering and terrorist financing via crypto.

    The Netherland’s Financial Intelligence Unit noted that the number of unusual transactions with cryptocurrencies has increased from an average of 300 to up to 5,000 a year, NOS reports.

    The proposed licensing system would reportedly require crypto exchanges and wallet providers to monitor their customers’ transactions and report suspicious activity to authorities. The exchanges will also have to collect and store information about their customers in order to be able to hand it over to authorities in case of an investigation.

    The Netherland’s central bank reportedly announced that the companies will be tested before being granted the license, for instance to check if they are able to collect the required user data.

    Richard Kohl, a board member of the Bitcoin Nederland Foundation, has reportedly stated that the measure is “dramatic for young innovative companies,” defining the new regulations as a big step backward in the local innovation culture.

    The article report that he expects the new regulation to bring in large amounts of paperwork and vast expenses to the companies in order to stay compliant. All of this, according to Kohl, will cause major competitive disadvantages compared to large established parties such as banks.

    Kohl reportedly also declared that too little research has been done about the actual dangers brought on by cryptocurrencies, and that he thinks the measures taken are too extreme. He also pointed out his concerns about other possible consequences of the requirement of the storage of user data:

    “Banks and financial institutions already need to keep track of customer and transaction information [...] you may wonder how well our personal information is protected and used, such as how the Chinese government wants to be able to follow all transactions of all citizens.”

    As Cointelegraph reported in December of last year, cryptocurrency service providers will soon be required to obtain a license from the central bank of the Netherlands.

    In August 2018, news broke that an executive at the Dutch central bank had said that while cryptocurrencies are not “real money,” the bank has no plans to ban them.


    Oceans Apart: Crypto Regulation in the US and EU


    Noelle Acheson is a veteran of company analysis and member of CoinDesk’s product team.

    The following article originally appeared in Institutional Crypto by CoinDesk, a newsletter for the institutional market, with news and views on crypto infrastructure delivered every Tuesday. Sign up here.


    Spare a thought for the financial regulators: the American ones, with no paycheck during the government shut-down and a whopping backlog awaiting when they eventually get back to work; and the European ones, with a fragmenting union, disjointed capital markets and a glut of new rules seeping through the labyrinthine halls of power.

    Now, compare the very different approaches to crypto asset regulation from each side of the Atlantic.

    While the U.S. Securities and Exchange Commission (SEC) is contemplating the bigger picture and working on drawing up sector-wide rules, it is also passing judgment and handing out punitive fines. Last year saw 18 digital token-related actions from the SEC, compared to five in 2017.

    The European side, however, seems to be more focused on figuring out how to contemplate the bigger picture. It’s thinking about what structure the decision-making process should take. It’s forming committees. Recommendations are flying across the departmental divides, and preparations are being made for the deliberations. It seems to be perpetually thinking about regulating digital assets, rather than actually doing so.

    As an example, earlier this month you may have noticed yet more calls for EU-wide crypto rules, this time from both the European Banking Authority and the European Securities and Markets Authority (ESMA).

    This may on the surface seem like the cultural differences that film lovers are already familiar with: the fast, action-heavy approach of the U.S. blockbusters vs. the thoughtful and careful style of the European indies.

    But it’s more than that. The differences are actually embedded in legal structures and traditions and highlight the unfathomable difficulty of reaching agreement on how the new class of crypto assets should be regulated.

    Deep roots

    European law is based on Napoleonic code, or “civil law,” in which everything is regulated by pre-established law or administrative decision. Codified statutes predominate, and regulation is often even more comprehensive than it needs to be, which also makes it less agile. Its aim, however, is to produce a uniform set of rules to cover all eventualities and to foster harmonious coordination.

    The U.S. runs on a “common law” system, in which judges have a greater role in decision making and rules are made on a case-by-case basis, often (but not always) based on previous rulings.

    Another big difference is that the European Union has sovereign nation-states to answer to. Many of the decisions taken by the EU have to be ratified by the actual countries, which gives them a lot more scope to undermine Europe-wide initiatives, depending on their national interest. Getting things done on a top-down, regional basis is very, very difficult.

    What’s more, in Europe securities law is still, on the whole, national. The push towards capital markets union is moving slowly, in spite of being one of the priorities of the current mandate: of the 13 foundational legislative texts presented by the commission since 2014, only three have been adopted.

    And time is running out: the current mandate ends in May, and the urgency fuelled by increasing concern over Brexit and the possibility of another financial crisis does not seem to have accelerated the pace of progress.

    In the U.S., the relationship between the states and the federal agencies is simpler. A long history of enforcement of the application of federal laws by the Supreme Court has brought a veil of interoperability to the patchwork of state regulation.

    Different speeds

    So, understandable frustrations over the lack of clarity on the part of the U.S. regulators and their slow, case-by-case approach should be tempered with an appreciation that at least they are not as cumbersome as their European counterparts. That, combined with the sheer size of the U.S. capital markets, means that all eyes are on what steps the SEC will take regarding crypto assets.

    Yet that’s not to say that the European Union is not taking crypto assets seriously. The report released by ESMA last week revealed the results of a months-long survey of member states’ regulators, in a bid to identify common definitions and parameters when it comes to digital tokens. It also highlighted gaps in current regulation and suggested measures to close them. The regional securities body recognized, however, that many of the potential solutions were beyond its remit, implying that actual agreed-upon measures were still a long way off.

    Meanwhile, we are likely to see individual countries in Europe take tentative steps toward allowing crypto asset issuance on regulated exchanges. Yet the reduced size of the local markets and the fragmented rules governing exchanges and custody are likely to constrain tokens issued in Europe, especially since network effects – which rely on a broad market – are a fundamental part of token valuations.

    In the U.S., on the other hand, 2019 is likely to bring a flurry of actions and statements from the SEC, as unregistered securities offerings are punished, listing proposals are examined and clarity is given as to expectations going forward. While this may influence other securities regulators around the world and edge the sector towards a more comprehensive framework, regional differences and national considerations make that probably wishful thinking.

    Yet even disappointing progress is better than none. The structural obstacles that hinder the good intentions of sprawling economic blocs, and the reduced size of more agile and “crypto-friendly” jurisdictions, will consolidate the U.S. role as one of the more secure and liquid markets for digital tokens. And its regulators will get the chance to set the precedent for crypto asset regulation going forward.

    Let’s just hope they can get back to work soon.

    Globe image via Shutterstock


    Wyoming Introduces a Bill Aiming to Define Virtual Currencies as Money


    A bill meant to clarify the classification of cryptocurrencies has been introduced in the U.S. state of Wyoming Jan. 18, according to the official state legislature website.

    The bill places crypto assets into three categories: digital consumer assets, digital securities and virtual currencies. The bill defines assets falling in any of those three categories as intangible personal property and grants virtual currencies the same treatment as fiat money.

    The proposed bill also authorizes banks to “provide custodial services for digital assets consistent with this section upon providing sixty (60) days written notice to the commissioner.”

    The drafted legislation also lets banks serve as qualified custodians in accordance with regulations put in place by the U.S. Securities and Exchanges Commission (SEC).

    Wyoming has recently seen a surge in blockchain- and crypto-related legislation entering its legal system. As Cointelegraph recently reported, a bill allowing corporations to issue blockchain-based tokens that represent stocks was introduced in Wyoming on Jan. 16.

    Also, news recently broke that Wyoming has passed two new house bills that aim to foster a regulatory environment conducive to cryptocurrency and blockchain innovation.

    On a more local level, the state has also shown interest in implementing blockchain technology for government administration. In December, the Wyoming county of Teton announced a new partnership with online retailer Overstock that targets land records.


    ICOs Raised $160 Million in First Half of January, Report Says


    Initial coin offerings (ICOs) completed in the first half of January have raised around $160 million. The figure was provided in a report by ICO rating service ICObench shared with Cointelegraph on Jan. 18.

    ICOs completed by Jan. 15 have managed to raise about 33 percent of the combined amount raised in the previous month of December. Half of that sum was secured by just one project, the report notes.

    According to ICObench, the number of fundraisers that are set to take place in January is more than 150, a figure similar to the past seven months, excluding December.

    In January, the combined hard cap — the maximum amount of money that a project can secure from investors during an ICO — amounts to more than $4 billion. As per the report, three fundraisers out of the five largest this month have reached or almost reached their hard caps.

    ICObench also reported that the number of ICO listings has continued to decline in January, suggesting that the phenomenon is losing its popularity.

    In terms of amount of funds raised, Canada has been leading during the first half of the month, with a combined figure of $80 million. However, when it comes to the actual number of projects, the Netherlands ranked first.

    ICO statistics by country in the first half of January 2019

    ICO statistics by country in the first half of January 2019. Source: ICObench

    On Jan. 16, major crypto exchange BitMEX released a report claiming that ICO teams have lost 54 percent of value of the initial $24 billion worth of tokens allocated to themselves due to the decline in coin prices.


    Ethereum Devs Propose Activating Constantinople Hard Fork in Late February


    Ethereum core developers have proposed activating Constantinople – a planned system-wide upgrade that was called off earlier this week – in late February.

    Also called a hard fork, Constantinople is now estimated by developers to go live some time between Feb. 26 and Feb. 28, with a block number to be determined at a future date.

    The proposal was made during a core developer phone call on Friday morning, and participants on the call included ethereum creator Vitalik Buterin and other developers, including Hudson Jameson, Lane Rettig, Afri Schoedon, Péter Szilágyi, Martin Holste Swende, Danny Ryan and Alexey Akhunov, among others.

    The decision comes after smart contract audit firm ChainSecurity flagged on Tuesday a security vulnerability in one of five Ethereum Improvement Proposals (EIPs) set for inclusion in Constantinople relating to data storage costs on the blockchain.

    As a result of the vulnerability, Constantinople, now set for activation next month, will not feature inclusion of the buggy EIP, which will be tested and refashioned for inclusion in a subsequent hard fork.

    Speaking to CoinDesk on Tuesday, Matthias Egli – COO of ChainSecurity – highlighted that the issue was likely not picked up by core developers when running tests on the software given that the impact is rooted in smart contract development, not necessarily “[ethereum virtual machine] core” development.

    A prompt decision to reactivate Constantinople sooner rather than later was needed in part due to prolonged activation of ethereum’s difficulty bomb – a piece of code embedded into the blockchain making block times increasingly longer over time.

    Meant to encourage transition to a new consensus algorithm known as proof-of-stake (PoS), a delay of the bomb was suggested in EIP 1234 due to insufficient research at present for a transition to PoS.

    Once activated on mainnet, Constantinople will include EIP 1234 and delay the difficulty bomb for a period of 12 months.

    Binary code image via Shutterstock


    Chip Maker TSMC Reports 'Big Drop' in Crypto Mining Revenue


    Chip-making giant Taiwan Semiconductor Manufacturing Company (TSMC) has reported a slump in its crypto mining business revenue for last year.

    The firm announced its Q4 2018 financial results and also published an earnings call transcript on Thursday, providing revenue details across business segments.

    In the transcript, TSMC’s CEO and vice chairman C. C. Wei said that the firm’s HPC (high-performance computing) segment was down in 2018 on a year-on-year basis, when its cryptocurrency mining business was included.

    Wei said:

    “Cryptocurrency is a big drop from 2018 to 2019. So if we put the cryptocurrency together in the HPC, it’s a big drop. It’s almost a double-digit.”

    When excluding mining, the HPC segment grew “slightly,” he added.

    TSMC did not provide specific figures for its crypto mining business in the transcript, because “it belongs to one of the big customers,” possibly a reference to crypto mining giant Bitmain as it remains the firm’s primary customer.

    Nearly 60 percent of Bitmain’s total chip supply came from TSMC in 2017 and the first half of 2018, according to its initial public offering application filed with the Hong Kong Stock Exchange back in September.

    TSMC also witnessed slower demand for crypto miners in Q4 2018, which resulted in inventory build-up.

    “You can imagine that cryptocurrencies mining, they dropped quite a lot,” Wei said, adding: “I will say it’s more due to the sudden drop in the demand rather than there’s some hidden inventory that we cannot see.”

    On the outlook for its crypto mining business in 2019, Wei said that the firm can’t provide a percentage forecast because the sector is “volatile.”

    Overall, on a consolidated basis, TSMC posted revenues of $9.40 billion in Q4 of 2018, showing a growth of 10.7 percent on a quarter-on-quarter basis and 2 percent on a year-on-year basis.

    TSMC’s SVP and chief financial officer Lora Ho said: “Our fourth quarter business benefited from the strong demand for our 7 nanometer technology covering both mobile and high performance computing applications.”

    For this quarter, TSMC has cut its revenue estimation to $7.3 billion–$7.4 billion, as the firm expects its business will be “dampened by the overall weakening of the macroeconomic outlook, mobile product seasonality, and high levels of inventory in the semiconductor supply chain,” according to Ho.

    Computer processors image via Shutterstock


    Winklevoss Capital: Investors Are 'Thoughtfully Dipping their Toes into Crypto,' Not Taking the Plunge


    Sterling Witzke, partner at the Winklevoss twins’ family office Winklevoss Capital, says she doesn’t think 2019 will be the watershed year for institutional investors to get into crypto. Witzke backed her claim by arguing that expectations are running ahead of facts on the ground.

    Witzke made her remarks during an interview with Cointelegraph at the Crypto Finance Conference in St. Moritz, Switzerland, Jan. 17. She argued that the upshot of the 2017 crypto market bull run — when Bitcoin soared to all-time highs of $20,000 a coin — has been a skewed perception of what it takes for traditional capital to embrace innovation:

    “Because the end of 2017 was so crazy, people tend to think the space moves at lightning speed [..] At the level of underlying [tech] development it [often] does [...] but I think it takes a while for institutions to get comfortable. There needs to be better custody, healthy debt and credit markets to get [them] really excited. So I don’t think 2019 will necessarily be the year.”

    Witzke added that while she’s seen many investors thoughtfully dip their toes into crypto, she hasn’t really seen any take the plunge. Two factors she isolated as important were a lack of regulatory clarity — especially in the United States — and concerns over security.

    As reported, the twins’ Gemini crypto exchange has recently launched an ad campaign which places a strong accent on solid regulation and compliance — encapsulated in slogans such as “crypto needs rules” and “crypto without chaos.” In light of some community opinions that this agenda runs counter to the original peer-to-peer ethos of crypto innovation, Witzke argued consumers in crypto deserve the same protections as traditional investors.

    “The distinction comes,” she said, “between the protocol layer and the companies and applications that are built on top of it. At the protocol level, it’s absolutely correct you don’t need more regulations or rules, because those are already built in.”

    A report issued last fall from “Big Four” auditor KPMG proposed that institutional investors are what is needed for the crypto industry to realize its potential as a full-fledged asset class — an opinion that is shared by many prominent voices within the crypto industry itself. Others have voiced concerns over the potentially adverse or — for some — unwanted impact of the increasing financialization of the sector.

    In interviews tied to their recent ad campaign, Tyler and Cameron Winklevoss steered the conversation beyond regulatory matters, saying they believe that stablecoins and tokenized securities are today among the most exciting developments in crypto. Their view was echoed at Crypto Conference this week by Bitcoin Association Switzerland board member Luzius Meisser, who said “stablecoins are a precondition for average companies to bring their equity onto the blockchain.”


    Cryptopia Alleged Hack: Police Are on the Case While Community Tracks Down Stolen Funds


    In what seems to be one of the first major security breaches of 2019, New Zealand-based digital assets exchange Cryptopia was allegedly hacked this week. The platform reported the incident via Twitter on Jan. 15, mentioning “significant losses.” While the incident has been confirmed by the local police, many crucial details — including the amount and titles of stolen tokens — remain undisclosed.

    Brief introduction to Cryptopia, an essential exchange for altcoins

    Cryptopia Limited, the company behind the self-titled exchange, was registered in July 2014, and the platform itself was launched later the same year. It is run by founders Rob Dawson and Adam Clark, who initially started it as a hobby born out of negative experiences with other crypto exchanges. Around January 2017, they allegedly quit their full-time jobs to focus solely on Cryptopia. The firm’s office is located in Christchurch, Canterbury, and there are around 50-100 people employed there.

    According to the New Zealand Government Companies Register, Cryptopia has a total of 90 shareholders. The majority of shares are controlled by Dawson and Clark, who hold 30.57 percent and 27.46 percent respectively. A substantial portion of the stock — 25.52 percent — is also held by a local software development and consultancy services called Intranel, while the rest of shares seem to be controlled by the co-founders’ relatives and private investors.

    As per Cryptopia’s LinkedIn profile, the company has “the world’s largest range of cryptocurrencies.” Indeed, the exchange has more than 830 cryptocurrencies listed, according to CoinMarketCap, which makes it one of the chief platforms for altcoin trading.

    The data obtained from Coingecko suggests that Cryptopia’s peak trading volume this year occurred on Jan. 11, when it reached around $1,875,000. The crypto exchange reportedly has around 1.4 million registered users and is the largest crypto exchange in the country. In May 2017, Cryptopia launched NZed (NZDT), allegedly the first stablecoin tethered to the New Zealand dollar.

    The incident was originally reported as “unscheduled maintenance”; the police are on the case

    The episode can be traced back to Jan. 14, when Cryptopia published a series of short tweets regarding “unscheduled maintenance.” Interestingly, the platform issued somewhat similar updates in June 2018, causing concern among users, who later reported withdrawal difficulties.

    Nevertheless, next day, on Jan. 15, Cryptopia officially announced that it was hacked the day before. According to the note shared by the platform, after finding out about the security breach, the exchange’s staff freezed all operations to assess damages.

    The exchange has also reportedly notified government agencies and authorities, including the New Zealand Police and High Tech Crimes Unit, who have opened an investigation into the matter and are reportedly treating the incident as a major crime. On Jan. 16, the police confirmed that they are investigating the case.

    “The inquiry is still in its very early stages and police are continuing to work with Cryptopia to establish what has happened and how.”

    According to local media outlet Stuff, on Jan. 16, the police locked down Cryptopia’s office in Christchurch while some of the staff remained inside. The authorities later reported that the exchange’s staff are fully cooperating with the investigation team, but noted that media reports claiming that police “stormed” the building are “entirely incorrect.”

    Further, the authorities are reportedly establishing a dedicated investigation team, including “specialist police staff with expertise in this area." The Financial Markets Authority (FMA) has also been called in, according to Stuff.

    The FMA spokesman cited in the article said the watchdog did not regulate Cryptopia or the cryptocurrencies listed there, “but those providing a financial service related to cryptocurrencies needed to register on the Financial Services Providers Register — which enabled customers to access an independent dispute resolution service.” According to the regulator’s website, New Zealand firms who provide a financial service related to cryptocurrencies need to comply with the “fair dealing” requirements in the Financial Markets Conduct Act 2013.

    The stolen amount remains undisclosed; social media estimates $3 million to $13 million being taken

    While Cryptopia’s website is still under maintenance as of press time, the exchange has not revealed which tokens have been stolen and to what extent, limiting its comment to state that the losses are “significant.” The company has since stated that they will not be providing a comment due to the ongoing police investigation.

    However, the police are also yet to confirm the exact amount of stolen money. As per their press release issued on Jan.16:

    “Police are not yet in a position to say how much cryptocurrency is involved, other than it is a significant amount. A large team, including Canterbury CIB and specialist staff from the police High Tech Crime Unit, have been assigned to the case.”

    With both Cryptopia and the authorities being unable to reveal concrete details of the alleged hack, the community has taken the matter into its own hands. Social media users have pinpointed one of the hacker’s alleged wallet addresses, highlighting large transaction numbers, as well as the timing of transfers, which reportedly occurred after the site went into maintenance mode.

    If true, the criminals have stolen an abundance of ERC-20 tokens, including Dentacoin, Metal, Ormeus Coin, PowerLedger, Revain, Zap Token, TrueUSD, Centrality, InvestFeed, PILLAR, Golem, Jetcoin, Fabric Token, DALECOIN, Soniq, VOISE, SpankChain, Mothership and Oyster Pearl, among others.

    “At this stage I'd probably believe reports of $11 [million] + USD equivalent hack,” Reddit user u/spronky writes, “I wouldn't be surprised if all the ERC-20 tokens in Cryptopia's hot wallets were thieved [sic].”

    According to another Reddit investigation, a total of $13,000 worth of cryptocurrencies could have been stolen from Cryptopia. User u/toldjahP has collected numerous wallet addresses affiliated with the alleged hackers and combined the transfers, which equalled the above mentioned figure. Similar addresses have been marked by Twitter community members as well. While some of those wallets appear to be empty as of press time, one of them holds as much as $3.6 million.

    Community is not rushing to call it a “hack”

    News of the incident has been met with concern and some scepticism in the crypto community, whose members have suggested that the incident could have been an “inside job” or “exit scam.” For instance, industry Twitter personality WhalePanda notably placed the word “hack” in quotation marks, while commenting on the matter:

    “Interesting that this happens in a bear season where small exchanges are struggling to make ends meet and are aggressively messaging anyone involved with crypto projects to get them to pay listing fees to get listed on their platforms.”

    In response to WhalePanda’s tweet, a couple of commentators have gone so far as to investigate Cryptopia’s recent transactions, claiming the exchange had moved Ethereum (ETH) worth several millions of dollars out of its wallet on Jan. 13, citing data from crypto exchange blockchain monitor Whale Alert. That correlates with Cryptopia’s previous announcement regarding the Ethereum’s (ETH) Constantinople hard fork, when the exchange warned its users that it was placing ETH and all ERC-20 tokens into maintenance between Jan. 14 and Jan. 18. The exchange then advised its users to move their ETH to “a wallet where they have a control of the private keys.”

    Some of funds have been frozen, Cryptopia users are preparing a lawsuit

    It seems that at least some of the stolen tokens have been frozen. On Jan. 16, after being tagged by a Twitter community member, Binance exchange CEO Changpeng Zhao said that he suspended “some” of the funds affiliated with Cryptopia after they ended up on his platform’s wallets and claimed that he will freeze more if social media users report them.

    Similarly, other Twitter users have published screenshots suggesting that has also been warned about some of the stolen funds from Cryptopia being traded on their platform.

    As for the legal aftermath, the situation is also unclear at this point. According to local media and radio outlet Radio NZ, up to 40 Cryptopia users have come forward to legally demand an explanation as to why their funds are inaccessible.

    “We were contacted initially by about three people [last year], including a South African lawyer, who were complaining that they were having trouble transacting using their wallets and couldn't withdraw funds,” the lawyer handling the case told the publication.


    Ethereum Co-Founder Joe Lubin Joins Board of Crypto Futures Platform ErisX


    Crypto trading startup ErisX is expanding its board of directors as it prepares to launch spot and derivatives markets for digital assets, including bitcoin and eventually ethereum.

    The company announced Thursday that Joseph Lubin, founder of the ethereum development studio ConsenSys, and Cris Conde, a technology entrepreneur, had joined the board. They will serve alongside DRW CEO Don Wilson, Valor Equity Partners managing partner Antonio Gracias and ErisX CEO Thomas Chippas.

    In a press release, ErisX cited Lubin’s experience working in the digital asset space and his familiarity with the ethereum network (he was part of the second-largest cryptocurrency’s founding team).

    The company initially plans to provide bitcoin futures products when it launches (though this launch may be delayed by the ongoing U.S. government shutdown), but plans to add support for ethereum and litecoin futures down the line.

    ErisX head of marketing Jessica Darmoni told CoinDesk via email that launching ether products remains a goal for the company, but declined to say if the company was planning to actively lobby for or announce an ether futures product in the near future.

    “As a general rule, we don’t comment on engagement with regulators while we are still in process with them,” she said., adding:

    “However, we can say that Mr. Lubin and his team bring extensive knowledge and background on Ethereum, the crypto space as well as the token space to ErisX.”

    ErisX CEO Thomas Chippas previously told CoinDesk that the company’s “interaction with the CFTC has been both positive and productive,” and that the firm was looking forward to resuming its work with the regulator on its derivatives clearing organization application.

    The board has been expanded from four seats to five. Lubin took the new seat; Conde, a former CEO of software giant Sungard, will replace former independent board member Cliff Lewis, who had been on the board since Feb. 2018.

    Joe Lubin at Consensus 2018, photo via CoinDesk archives


    Huobi Resumes Trading in Japan as FSA-Licensed Exchange


    Cryptocurrency exchange Huobi — currently the world’s 7th largest by daily traded volume — has relaunched as a fully licensed platform in Japan after merging with BitTrade. The news was announced in a press release published Jan. 17.

    As reported, Huobi Global's wholly owned subsidiary, Huobi Japan Holding Ltd, acquired a majority stake in BitTrade last September. At the time, BitTrade was one of only 16 crypto exchanges in the country to have secured a license from national financial regulator, the Financial Services Agency (FSA).

    Leon Li, Huobi Group Founder and CEO, has said that securing the license represents a significant milestone for Huobi, given the importance of the Japanese market.

    Huobi’s press release takes pains to emphasize security provisions, outlining that Huobi Japan “features specialized distributed architecture, a Distributed Denial of Service (DDoS) attack countermeasures system, and A+ ranked SSL certification (the highest available).”

    According to the press release, Huobi Japan supports trading of Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Ripple (XRP), and Monacoin (MONA).

    While a license has been mandatory for all crypto exchanges operating within Japan since the amendment of the country’s Payment Services Act back in April 2017, the FSA has continued to ratchet up requirements for applicants throughout 2018, in the wake of last January’s industry-record-breaking $532 million theft of NEM tokens from Coincheck.

    Ahead of Huobi’s majority stake deal — BitTrade became Japan’s first FSA-licensed platform to be fully acquired by an international investor, the Singaporean multi-millionaire and entrepreneur Eric Cheng. The investor also acquired BitTrade’s affiliate company, FX Trade Financial Co., Ltd — one of Japan's leading forex trading platforms. Following the Huobi deal, FX Trade Financial retained 25 percent of the BitTrade’s shares.

    Founded in China in 2013, Huobi Group has been headquartered in Singapore since Beijing’s crackdown on domestic crypto-fiat exchanges in September 2017. As part of its ongoing overseas expansion efforts, the platform has recently rebranded its United States-based strategic partner trading platform HBUS to the better known Huobi name.

    Following Coincheck’s very recent acquisition of an FSA license, the total number of regulator-approved exchanges in Japan stands at 17.

    Last fall, an executive from leading U.S. crypto exchange Coinbase made positive remarks about Japan’s crypto regulatory climate, saying that the FSA’s intense focus on security is “good for us.” Coinbase has had plans to secure a license to operate within the country in the works since June 2018.

    Huobi has seen $299.6 million in trades over the 24 hours to press time, according to CoinMarketCap data.