The latest exchange to target U.S. institutional investors comes from Japan-based bitFlyer, the operator of Japan’s leading Bitcoin exchange by volume. bitFlyer announced on Tuesday the launch of bitFlyer USA, a San Francisco-based virtual currency exchange for U.S. traders to buy and sell Bitcoin. The new platform, designed for professionals who trade at least $100,000 in virtual currency each month, will enable traders to place market, limit and other complex trade orders and give traders the ability to connect to the firm’s Japanese exchange.
Bartek Ringwelski, bitFlyer USA’s chief operating officer, said in the statement on Tuesday:
“Our expansion and upcoming cross-border trading addresses a huge unmet need in the U.S. by institutional traders looking to access large amounts of liquidity across multiple virtual currency markets. Through our web interface or API, approved professional traders can be up and running and making trades in a matter of hours.”
bitFlyer, which opened its San Francisco office in August, says its Japanese exchange has traded more than $100 billion in virtual currency so far this year. The firm’s U.S. launch broadens access to cryptocurrency trading via exchanges in a market that’s been noticeably burdened by a complex regulatory environment (varying state-to-state) and, as a result, dominated by a few key players, including Coinbase’s GDAX, Bitstamp and Bitfinex.
As part of the Tuesday announcement, bitFlyer said it received regulatory approval over the weekend to operate its exchange in New York, becoming just the fourth company to be granted the New York State Department of Financial Services’ “BitLicense,” which allows those possessing it to engage in virtual currency business in the state. Coinbase is the only other exchange operator to be awarded a BitLicense by the New York DFS.
By volume, Coinbase’s GDAX is one of the most popular exchanges in the world. Its latest 24-hour trading volume of $523 million is nearly half made up of bitcoin-to-USD trades. From its Japanese exchange, bitFlyer’s one-day volume currently stands at the equivalent of about $159 million, per CoinMarketCap.
With the New York approval, bitFlyer says it now has a regulatory green light to operate in 40 states and the District of Columbia, besting the count listed on Coinbase’s website of 37 regulatory approvals in the U.S.
This move grants U.S. traders access to Japan’s cryptocurrency market, giving access to the liquidity of a country with a high concentration of Bitcoin trading. According to data from digital currency platform CryptoCompare, trade volume in Japanese yen leads Bitcoin trading among all fiat currencies. The momentum of yen-to-Bitcoin trading has exploded since late 2015, when it averaged about 10% of global volume. To compare, in the last 24 hours, Bitcoin trading in Japanese yen has made up more than 60% of total trading volume. Meanwhile, the figure for the U.S. dollar is about 20%. The national currency with the third-largest Bitcoin trading volume, at about 10%, hails from South Korea, where the popularity of exchanges has bolstered access to cryptocurrencies since around March of this year.
And while exchange competition heightens, news of growing institutional trading options for Bitcoin and other cryptocurrencies has come in waves over the past few weeks.
Earlier this month, Coinbase announced it’s launching a digital asset custodian meant to provide financial controls and secure storage for institutional investors trading digital currencies. “An even greater number of traditional institutions are starting to look at trading digital assets (including family offices, sovereign wealth funds, traditional hedge funds and more). By some estimates, there is $10 billion of institutional money waiting on the sidelines to invest in digital currency today,” said Coinbase CEO and Co-Founder Brian Armstrong in a letter addressing the launch of Coinbase Custody. Meanwhile, J.P. Morgan has reportedly been eyeing the launch of CME Group’s Bitcoin futures, slated for release later this year — in spite of CEO Jamie Dimon’s Bitcoin attacks just months ago.
bitFlyer has raised about $36 million in funding since it was founded in 2014 by two alumni of Goldman Sachs. Fees for the U.S. exchange during a beta testing period ranged from 0.11% to 0.25% for both takers and makers, depending on volume, similar to fees at other exchanges. bitFlyer said it’s planning to expand its support of U.S. offerings to include Ethereum, Ethereum Classic, Litecoin and others within the next year.
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