Japanese companies that continue the cryptocurrency exchange business and those that withdraw from the business

In line with announcements of financial results, the trends and policies of Japan’s leading cryptocurrency-related companies are gradually becoming clear.

Financial results announced on November 5 reveal that DMM Bitcoin posted an operating loss of JPY 319 million (USD 2.80 million) for the fiscal year ended March 31, 2018 (April 2017 to March 2018). DMM Bitcoin is a cryptocurrency exchange operator and a group company of DMM.com, Japan’s leading e-commerce company. The primary cause of the loss is the posting of selling, general and administrative expenses far exceeding net sales of JPY 1,833 million (USD 16 million).

However, because DMM Bitcoin started providing exchange services on January 11, 2018, results for less than three months are included in the financial results. Therefore, its financial results for the fiscal year ending March 31, 2019 (April 2018 to March 2019) are expected to attract a great deal of attention. Mr. Kito, CEO of GMO Financial Holdings, Inc., Japan’s leading listed company operating a GMO Coin cryptocurrency exchange, DMM Bitcoin’s competitor in Japan, is reported to have commented that its cryptocurrency business is ready to generate profits. The comment was made at the third quarter (January to September 2018) earnings briefing held on October 26.

Meanwhile, GMO Internet, a GMO Group company engaged in the mining business, revealed a plan to shift its focus from promoting the mining business, including in-house and cloud mining, to boosting sales of mining machines after its in-house mining business fell into a deficit in the 2018 second quarter financial results announced in August. The company’s future actions will attract attention because they will help to predict the direction of the mining business in Japan.

In line with strengthening controls over cryptocurrency exchanges in Japan, a self-regulatory body has facilitated the development of industry rules. Against this backdrop, it is becoming gradually clear that there are companies making applications for registration with the Japanese Financial Services Agency as a cryptocurrency exchange and others that are abandoning their plans to enter the business. Although CyberAgent, Inc., Japan’s leading Internet advertising company, established a cryptocurrency company in October 2017, the company announced its decision in April this year to give up plans to enter the business and instead issue original cryptocurrencies in 2019. The official dissolution of CyberAgent’s cryptocurrency company was reported on November 12. Meanwhile, there are leading Japanese companies that have decided to enter the business, including through acquisitions of cryptocurrency operators by subsidiaries of Japan’s leading e-commerce companies Rakuten Group and Yahoo Japan Corporation.

Because Coinbase, a leading US cryptocurrency exchange, plans to expand into Japan in 2019, close attention will be paid to how market shares of cryptocurrency exchange business in Japan will change in the future. *This article was written by Fisco