World Economy

Japan Tech Firms Double Down on Crypto Industry

Rakuten says the role of cryptocurrency-based payments is expected to grow in the future.Rakuten says the role of cryptocurrency-based payments is expected to grow in the future.

The fall in the value of bitcoin and other cryptocurrencies, and Japan’s crackdown on the industry in the wake of a hacking scandal in January, have not deterred some of Japan’s biggest technology companies from doubling down on the industry.

Japanese internet services company Rakuten said on Friday it is acquiring Everybody’s Bitcoin Inc., a local cryptocurrency exchange, for 265 million yen ($2.4 million), seeking synergies with its e-commerce site as well as its fintech services, Nikkei reported.

On the same day, online chat service provider Line announced its first original cryptocurrency, LINK, which will be launched in the company’s cryptocurrency exchange Bitbox.

Rakuten’s credit card subsidiary Rakuten Card will buy 100% of the stock of Tokyo-based Everybody’s Bitcoin from its parent company, Traders Investment. The deal is expected to close on Oct. 1.

Rakuten, Japan’s e-commerce giant as well as operator of more than 70 fintech services including an online travel agency, securities and insurance, has been exploring the cryptocurrency field.

It established blockchain research center Rakuten Blockchain Lab in England in 2016 to work on next-generation payment systems. In February, CEO Hiroshi Mikitani revealed the Rakuten Coin plan, a blockchain-based loyalty program.

“We expect that the role of cryptocurrency-based payments in e-commerce, offline retail and in (peer-to-peer) payments will grow in the future,” Rakuten said in a press release. “In order to provide cryptocurrency payment methods smoothly, we believe it is necessary for us to provide a cryptocurrency exchange function, and have been considering entry into the cryptocurrency exchange industry as the Rakuten Group.”

Entry into the cryptocurrency industry by large corporates comes amid tighter regulations, which have made it difficult for newcomers to do business independently.

Japan’s Financial Services Agency launched a probe into cryptocurrency exchanges after more than $500 million worth of coins were stolen from Coincheck, one of the country’s most popular exchanges. As a result, scores of companies were ordered to suspend operations or devise stricter oversight measures. Coincheck was acquired by local brokerage Monex Group in April.

Everybody’s Bitcoin was allowed to operate while seeking official registration. In April it was issued with business improvement orders by the Financial Services Agency urging a better management framework or countermeasures against money laundering.

The exchange expects to receive earlier official approval under Rakuten’s control.

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