The CEO of Asian bitcoin exchange Quoine says the region will dominate the bitcoin landscape over the coming years, as his company completes a funding deal worth $20 million USD.
Quoine’s new investment comes from VCs and other “strategic investors.” There has been a flurry of investment announcements from Japanese bitcoin exchanges this year, with bitFlyer sealing a $27 million deal in April and Zaif raising $6.5 million in May.
Asian Whales Coming on Board
Mike Kayamori, who recently took over as Quoine CEO, told Bitcoin.com his company would continue to focus mainly on Asian business, describing the level of trading activity there as beyond expectations.
“Our Indonesian volume is on fire. On any given day, sometimes the Indonesian volume exceeds that of Japan. There’s a lot of demand.”
Indonesia is home to a surprising amount of bitcoin mining activity, with operators looking to liquidate their new coins immediately. Across the region, there are also promising signs for bitcoin in remittances, money transfers, and in ties to existing (fiat currency) online brokerages.
Quoine, which historically did most of its trade in Japan, now sees about 45 percent of its total volume coming from other parts of Asia, Kayamori said, describing it as a “great balance.”
The company has also noticed some big “whales” from Asia coming on board in recent months.
The exchange is reportedly reaching new highs in trading volume every month, with over $240 million worth of transactions in May.
Quoine Relocating to Japan
Quoine was, until recently headquartered in Singapore, but is now in the process of moving to Tokyo. Its Singapore office will remain as a subsidiary.
Kayamori said the new, more favorable regulatory atmosphere in Japan is definitely behind the decision to move.
The government recently determined that exchanges in Japan, and (importantly) those located in foreign countries but serving the Japanese market, would be regulated equally by the Financial Services Agency (FSA). That includes the FSA’s authority to conduct on-site office inspections.
Therefore, it makes more sense to be located in a place where the FSA is more accessible. There is also the simplicity of the new Japanese rules compared to other countries — the FSA is the only regulatory authority with which bitcoin exchanges are required to register.
Japan’s FX-Loving Investment Culture
Online currency trading, store loyalty point cards, mobile game tokens, even pachinko — are all popular forms of speculative investment in Japan, Kayamori said.
Thanks to deflation and a cultural aversion to investing in stocks and funds, coupled with an unusual interest in money itself, the Japanese public is active in the FX trading market.
That makes it a natural fit for bitcoin and cryptocurrency trading, Kayamori said.
“From a liquidity and volume perspective, I think Japan is going to be larger than China. When you look at retail FX, you don’t need any explanation. Japan’s retail FX liquidity already dwarfs any other country in the world.”
Quoine sees opportunity in this market. Rather than trying to draw customers away from the existing online FX trading behemoths, his company wanted instead to follow a business-to-business path. An “exchange for exchanges” offering its liquidity to established brokerages who also see future growth for cryptocurrency trading.
It’s Asia, Not the West
That kind of potential in Asia means Quoine will focus on the Asian market only, and will not seek customers in Western markets. Though it offers USD trading, Quoine does not accept US residents as customers.
“Convoluted” regulation is mostly to blame for this, Kayamori said, and Asia-based exchanges are more able to offer sophisticated trading products like futures, leverage, bitcoin-lending and more.
Asia’s diverse economies also present unique opportunities, he added. In the region’s emerging markets there is no one dominant currency, and people are more used to transferring and exchanging.
There is also the opportunity to “leapfrog” traditional banks in regions like Indonesia and Philippines, where up to 70 percent of residents don’t even have bank accounts.
And at the center of it all is Japan — still a major economic player in the region, and showing every sign it is adapting well to the crypto-economy.
Does Asia’s more permissive approach to cryptocurrency regulation make it more attractive to startups? Do you think Asian ‘money culture’ also plays a part in growing interest?
Images courtesy of Timbena, Quoine.