ChainDD Exclusive | Japanese Licensed Crypto Exchange Has a Breakthrough, GMO Launched New Business

Source: Visual China

As summer slows down and the chill of autumn approaches, nothing seems to be colder than the current cryptocurrency exchange in Japan. It has been an apprehensive eight months since the Coincheck incident and Japan’s Financial Services Agency has yet to approve a single license application of any stock exchange or platform. It also doesn’t help that the the ICO policies in Japan are unclear right now and new policy could be passed at any time.

This strict change in policy in just eight months has caused many businesses to shut down and discouragement has soared. It is now more than ever the worst time for digital currency transaction platforms in Japan. ChainDD had previously reported that licensed Japanese platforms we’re trying to find another path outside of their domestic market, and now major transaction platforms have finally begun doing so. GMO is likely the only pure digital currency transaction platform that combines the business and consumer ends with the crypto mining operation. Its focus is on developing digital currency rather than ICOs or blockchain business.

Japanese Licensed Crypto Exchange GMO Started Consumer End Transaction

On September 5th, GMO announced that they would participate in digital currency transaction through both in-stock and leverage transaction with Bitcoin. The leverage platform transaction is less than 10-time volume, while single trade volume is within 2 Bitcoins per person and the trade volume per day is under 1,000 Bitcoins under the same platform.

One of our Japan-based researchers reported that around half of GMO’s transactions are real in terms of trade volume among Japan’s sixteen major crypto exchanges with licenses. Although GMO launched their cryptocurrency trading business relatively late, it still boasts a promising future.

GMO was one of the companies directly affected by the Financial Services Agency policy. They didn’t start their own consumer-end user business because the new policies prohibited them from doing so. It is useless to start a business with no license in Japan.

The process of launching digital currency in Japan is vastly different from other parts of the world. Even platforms with a license cannot announce what digital currency they are planning to release without approval from the Financial Services Agency. At least 420 examinations must be passed before a digital currency may launch, which can amount to an excruciatingly long wait time for Japanese developers. Currently, Zaif, an exchanged own by Tech Bureau Corp., has the largest number of cryptocurrencies, with fourteen.  

During the examination process, each company must turn in a report detailing their digital currency. An official from the Financial Services Agency notes that the procedure will be longer if the crypto exchange hands over different information than the company itself. For instance, EOS has not seen any progress in their examination, since the information they turned in did not match up with the information turned in by crypto exchanges.

Knowing they won’t succeed in new business alone, GMO models their business development after their parent company. In the past, GMO Coin was primarily involved in business end services, such as lending Bitcoin, paying salaries, and paying employers in Bitcoin. However, cryptocurrency mining is now their main business affair. On August 15th, 2018 the company claimed to provide consumer end transaction services, but the truth was that this had been delayed many times. Their financial statement shows that in August, the total volume of Bitcoins extracted by GMO was 510, with the Bitcoin cash volume being 25, and their hash value at 459H/s. This GMO mining operation report can even be found in previous CHAINDD reports. GMO released their mining report that 1,906 Bitcoins valued at JPY 163.4 million were dug out in seven months. Although, in February GMO dug 287 Bitcoin cash while they found zero in July. This means that they already gave up on the Bitcoin cash mining operation and began focusing primarily on digging Bitcoin.

Statistics on their mining facilities have not yet been released, but as the value of Bitcoin decreases, GMO’s financial report shows a loss in their digital currency business for two consecutive seasons. Income generated by the digital currency related business was JPY 161.2 million (approximately USD 14.5 million) but their overall loss was JPY 258 million (about USD 2.3 million).

GMO Give a Shot to “Gaming is Mining”

At the end of July, GMO began to offer digital currency refund plans to users of Whimsical War, a game developed by the company. The first 1,500 users can share Bitcoins valued at JPY 3 million. GMO Group announced in August that they have 183,700 registered users, which is a 5.4 percent growth compared to the previous month.

Despite all of the success GMO has garnered, it has still yet to compete with the likes of world renowned Japanese companies like bitFlyer and QUOINE, or experienced crypto exchanges such as Money Partners and SBI Virtual currency. Although, we’re still waiting for its trade volume to increase, GMO’s revolutionary business model is one to learn from.

Despite the fact that GMO enjoys all advantages, it is still not the biggest winner in the field of digital currency as its trade volume is small at the moment, which cannot rival bitFlyer and QUOINE, Japanese companies that rank high around the globe. And GMO cannot be compared with experienced crypto exchange such as Money Partners and SBI Virtual currency. However, GMO can make good use of its advantage in culture industry and their new business model is a good example to learn from.