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Japan’s Financial Watchdog Orders Hacked Exchange Zaif to Improve Business

Japan’s financial regulator, the Financial Service Agency, has issued a business improvement order to Japanese investment firm and Zaif crypto exchange operator Fisco.

Japan’s financial regulator, the Financial Service Agency (FSA), has issued a business improvement order to Japanese investment firm and Zaif crypto exchange operator Fisco.

According to Cointelegraph Japan, the FSA has identified shortcomings in Fisco’s internal control systems — such as anti-money laundering measures — and found it to be insufficiently compliant with local laws and regulations.

As previously reported, Fisco assumed ownership of Japanese exchange Zaif in fall 2018, shortly after the platform was hacked to the tune of ~$59.7 million.

The FSA’s action has reportedly been taken under the provisions of the country’s Act on Settlement of Funds.

The regulator said Fisco’s management failed to recognize the importance of legal compliance, and ordered it to improve risk management systems. It must also establish more robust internal management, outsourcing, accounting, and auditing.

Moreover, the FSA has reportedly identified shortcomings in the platform’s customer verification systems, noting that:

“In the section where users can enter identity verification information, they can select “other” if it is not possible to check their occupation or purpose of the transaction. When “other” is selected, the account can be opened without entering anything.”

As Cointelegraph Japan reports, twelve of the nineteen crypto exchange businesses registered for on-site FSA inspections have now been completed. Of the remaining seven, up to four have reportedly not yet launched. The remaining await a survey by the regulator.

This April, Cointelegraph cited unconfirmed reports that the FSA had conducted investigations into both Fisco and Huobi Japan — the local off-shoot of China-born exchange Huobi — to check their customer protection and legal compliance.

This May, the Japanese House of Representatives officially approved a new bill to amend the national laws governing crypto regulation — specifically the Act on Settlement of Funds and the Financial Instruments and Exchange Act.

The revised acts aimed to protect users by means of regulating crypto derivatives trading and improving exchange security standards are expected to go into effect April 2020.

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Japan’s Line Reportedly Close to Obtaining FSA License for Japanese Crypto Exchange

LVC Corporation is allegedly close to obtaining an FSA-issued crypto exchange operating license.

LVC Corporation, the digital asset- and blockchain-focused arm of Japanese messaging giant Line, is allegedly close to obtaining a crypto exchange operating license from Japan’s financial regulator. The news was reported by Cointelegraph Japan on June 20.

According to the report, Japan’s Financial Services Agency (FSA) could issue the company with an exchange license as early as this month.

The trading service, to be dubbed BitMax, would enable Line’s 80 million users in Japan to buy and sell multiple major cryptocurrencies, as well as Line’s native token Link, CT Japan notes.

Per a press release recently shared with Cointelegraph, Line counts 187 million global users monthly, with an estimated 50 million users registered its mobile payment service, Line Pay.

BitMax will reportedly use the same back-end infrastructure as the Singapore-based, global user-focused crypto exchange BitBox, which was launched by Line in July 2018.

BitBox notably remains inaccessible for Japanese users given the country’s exchange license requirements. The license has been mandatory for all crypto exchanges operating within Japan since the amendment of the country’s Payment Services Act back in April 2017, and the FSA has since then continued to ratchet up requirements for applicants.

A report from local English-language newspaper The Japan Times has today contextualized Line’s accelerating foray into cryptocurrencies and blockchain against a backdrop of sluggish user growth which has ostensibly driven the firm’s shares to their lowest since listing in 2016.

Meanwhile, the firm awaits a banking license that would authorize deeper integration of cryptocurrencies with its other services, including e-commerce, The Japan Times notes, but it is allegedly only likely to be issued in 2020.

As previously reported, Line rolled out its Link cryptocurrency in late summer 2018, and has continued to develop its token ecosystem based on the firm’s in-house service-oriented blockchain, Link Chain. The blockchain network also enables decentralized applications to be directly applied to Line’s messaging platform.

Earlier this month, Line partnered with American payment services firm Visa on new blockchain and digital payments solutions.

American social media behemoth Facebook has meanwhile this week unveiled its white paper for its libra cryptocurrency, which would — according to earlier reports — prospectively be used by the 2.7 billion monthly users of WhatsApp, Messenger and Instagram.

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Liquid CEO Explains the Gram Token Sale Is ‘Natural,’ Disputes Conspiratory Theories

Mike Kayamori of Liquid told Cointelegraph how it came to agree with Gram Asia on their exclusive deal for the coming Gram public sale.

It was a “natural” development.

That is how Mike Kayamori, the CEO of Liquid described an exclusive deal with Gram Asia on public sales of Telegram Open Network (TON), a decentralized network being developed by privacy-focused messaging platform Telegram. Kayamori told Cointelegraph how Liquid came to agree with Gram Asia. He also claimed that Liquid was the pioneer of initial exchange offering (IEO) and explained which advantages Liquid has in the IEO market.

“Everything is between Gram Asia and Liquid”

The upcoming IEO at Liquid is a public sale of gram, which is the native token of TON. The Liquid deal was not made with Telegram, but with Gram Asia, the largest Gram holder in Asia. Kayamori confirmed this by saying that “everything is between Gram Asia and Liquid.”

He explained the process of reaching the agreement as follows:

“It was natural. We knew the Gram Asia people. We also believed in Telegram Open Network and its community. […] A limited scope compared with $1.7 billion. But let’s do a proper public sale so that Telegram users and greater community can participate in before the actual listing that will happen in October.”

Telegram conducted a private token sale to accredited investors last March, reportedly raising a total of $1.7 billion. The company released a testnet version of TON last month and is planning to launch the mainnet in October.

As to the timing of the public sale, Kayamori explained that Gram Asia made “conscious efforts  to try to expand that ecosystem prior to having it listed.” He also added, “I think they wanted to wait until the testnet happens.”

Kayamori acknowledged that some people are questioning why they are selling it now. He said that “there is a lot of conspiracy theories.” Liquid will be announcing a statement to clarify some misunderstandings by media reports as to the gram public sale shortly.

He also suggested Gram Asia’s role as an incubator that works on the TON project and how it is part of the robust community of TON ecosystem.

The public sale is scheduled for July 10. As to the price or the amount of tokens for sale, Kayamori said it would be released about a week before the sale.

The sale will be available everywhere except for some 50 countries, including the United States and Japan. But Kayamori sees a high potential in the powerful combination of the TON network and Telegram’s 200 million active users:

“If you are a distributed app vendor,  would you want to be listed on top of Ethereum? or EOS? Or do you want to be built on top of TON? Ethereum is great. It is a gold standard of ICO. EOS is decentralized and good but who has 200 million active users already? […] The TON network app vendors building their applications on it, when it integrates into Telegram, that is going to be special.”

Pioneering IEOs

In 2019, major crypto exchanges such as Binance and Bitfinex are getting attention with conducting IEOs and raising a huge amount of money. But, in 2017, Liquid already did it with their own token, Kayamori insisted:

“We were the first exchange to offer IEO. This was November 2017, when we listed our own token. I mean when we did a public offering of our own token, at the time it was called ICO. We conducted that ICO on the exchange”

He was referring to the qash token sale in 2017, which sold 350 million qash tokens, equivalent to $105 million.

Already in 2017, Liquid already realized the importance of doing a token offering and raising capital by “someone who can validate, someone who can verify, someone who can do due diligence.” One of the problems with initial coin offerings (ICOs) was that token issuers “would just do it on their websites with zero KYC” — i.e., Know Your Customer compliance. As previously reported, there are a lot of ICO frauds cases.

Moreover, while Kayamori welcomes the recent development of the IEO market, he thinks Liquid has advantages:

“As a group of companies, we are regulated in Japan. We also have fiat on-ramps and off-ramps. I don’t think any other exchanges that do IEOs have fiat on-ramps and off-ramps.”

Although the upcoming gram token offering is taking place on Liquid Global, Kayamori believes that it can bring the “best practices” that it has nurtured in Japan, which is “one of the most strict and the most conservative in the world.”

Japan recently passed revised crypto laws, one of which, among many others, asks exchanges to hold clients’ funds in a more secure way.

Moreover, Kayamori pointed out the advantage of using stablecoin USDC for the upcoming sale. All proceeds from the sale will be held in USDC in the custody of Liquid until October. Kayamori explained that, by using USDC, investors can always check how much they have on the blockchain.

“We bring the lessons learned,” Kayamori promised.

Having done the first IEO in 2017 and being regulated in Japan, known for strict regulation, Kayamori sees that proper IEOs conducted by regulated exchanges will attract investors in the future. How will the IEO pioneer stand out in the increasingly crowded IEO market? We might get some hints from the public gram sale on July 10.

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Japan Hopes to Set Global Crypto Law Benchmark With Latest Regulatory Update

While Japan’s new laws are welcoming for most crypto exchanges, as they expect more institutional investors, custodians and wallet makers are getting worried.

On May 31, the Japanese House of Representatives amended two cryptocurrency-related laws, the Payment Services Act and the Financial Instruments and Exchange Act, which will come into effect in April 2020.

Most Japanese crypto exchanges have welcomed the changes, since they expect more institutional investors to join the crypto industry. However, others voiced their concerns that the changes may bring some uncertainty to custodians and wallet service providers.

The two documents outline several specific changes, which can be discussed separately.

The Payment Services Act (PSA)

Virtual currency to crypto assets

The new law revises the term “Virtual Currency” and says that “Crypto Asset” would be a better term to use to describe cryptocurrencies. The change was made since “crypto assets” is used more frequently at international meetings, such as the G-20. Meanwhile, the use of “virtual currency” may mislead the public into thinking that cryptocurrencies function or hold the same status that is associated with fiat currencies. This change, however, is not compulsory for implementation by exchanges and the media.

Tighter restrictions on custodian services

According to the documents, custodian service providers will now have to share the same level of accountablility for the risks as exchanges, such as the leakage of users’ crypto assets and money laundering/terrorism financing. So, custodians will need to be registered with the Financial Services Agency (FSA) even if they don’t provide crypto exchange or trading services.

As of now, there are no specific guidelines for cases that are not clear cut. However, the governing bodies are likely to release further information to clarify the situation.

Exchanges must change how they store crypto

From April 2020 onward, crypto exchanges operating in Japan will have to manage users’ money separately from their own cash flows. This means finding a third-party operator to keep hold of the users’ money (this can be a trust company or any other similar entity).

When managing users’ money, “reliable methods” will have to be used, such as a cold wallet. If the exchanges manage users’ stored cryptocurrencies in other ways, such as a hot wallet system, they have to hold “the same kind and the same quantities of crypto assets” as the users’ crypto assets. This would enable the exchange to reimburse users if the funds get stolen from the platform.

Anonymous coins

The revised laws still do not directly regulate anonymous cryptocurrencies or privacy coins such as monero and zcash. On March 15, the FSA said it would deal with problematic crypto assets that are easily used for money laundering because their transaction records are not traceable. Back then, the agency dubbed the anonymous coins as “problematic crypto assets.” However inclusion of anonymous coins in the bill eased the speculations regarding whether the FSA is indeed planning to regulate this area of the crypto sphere. Also, a recent report highlighted that money laundering in Japan is on the rise.

As Cointelegraph reported earlier, in May 2019, Japan has been working on some time to combat money laundering through anonymous coins and imposed inspections upon exchanges that offered these coins for trade to their user base.

The Financial Instruments and Exchange Act (FIEA)

STOs

Revised FIEA documentation introduced the concept of electronically recorded transferable rights (ERTRs) to define that initial coin offerings (ICOs) and security token offerings (STOs) are regulated under the FIEA. ERTRs refer to tokens issued in the expectations of profits (i.e., security tokens).

More specifically, tokens issued under STOs can constitute ERTRs if the three requirements below are met, according to Japanese law firm Anderson Mori & Tomotsune:

“(i) Investors (i.e., right holders) invest or contribute cash or other assets to a business,

(ii) the cash or other assets contributed by investors are invested in the business, and

(iii) investors have the right to receive dividends of profits or assets generated from investments in the business.“

Notably, while ERTRs will be regulated under the FIEA, they are excluded from using the official term “crypto assets,” as per PSA guidelines.

Derivatives

From April 2020 onward, crypto asset derivatives transactions will be regulated under the FIEA. The law doesn’t specify margin rates, although the Japan Virtual Currency Exchange Association (JVCEA), a major self-regulatory organization in Japan, has a guideline that proposes to restrict margin rates by four times or even lower.

The Anderson Mori & Tomotsune report says that the JVCEA’s guidance “may be taken into account when specific provisions are promulgated by the relevant Cabinet Office Order.” It then goes on to suggest that the exact level may be decided upon in the future:

“Cabinet office orders determine how laws will be enforced in reality and something the Japanese crypto industry pays careful attention to after the amendment of the two laws on May 31st.”

Introducing a clear regulation on derivatives transactions may be urgent, since 80% of crypto trades comes from derivatives, and yet it is largely unregulated. Data from the Japan Virtual Currency Exchange Association (JVCEA) shows that the volume of leveraged, margin and futures trading for crypto was far higher than that of spot trading in Japan from April 2017 to March 2018.

Japanese crypto derivatives market: over 80% of trade volume

Prohibitions

The FIEA prohibits anyone from engaging in activities such as dissemination of rumors, usage of fraudulent means for purposes of selling or purchasing or engagement in any transaction in respect to crypto assets or for purposes of engagement in any crypto asset derivative transactions and the likes.

Anderson Mori & Tomotsune has set out the possible areas that may constitute a breach of law by the governing body:

“(i) engage in fake sales and purchases;
(ii) engage in collusive sales and purchases;

(iii) entrust or accept any entrustment of fake sales and purchases or collusive sales and purchases;

(iv) engage in market manipulation through actual sales and purchases;

Or
(v) engage in market manipulation through representations and certain similar acts”

Market reaction is mixed

“Japan is leading the crypto regulation”

Most Japanese crypto exchanges that Cointelegraph Japan contacted have spoken positively about the new laws.

Katsuya Konno, head of the CEO office of fintech company Quoine, welcomes the changes and thinks that the revised laws will enhance customer protections and encourage more institutional investors to enter the crypto industry. According to a translation of his comments, he told Cointelegraph:

“I think it’s great, frankly. With the revised content, customer protection is further pursued, so I think that Japan will be able to become a world leader in virtual currency-related regulations, and the entry of institutional investors will also increase. As new initiatives such as STO are becoming possible, the boundaries between virtual currency and existing finance may be overlapping more and more.”

As reported, Quoine’s trading platform, Liquid, hit unicorn status with over a $1 billion valuation in April 2019.

BitPoint, another crypto exchange in Japan, has also praised the new laws. The exchange’s spokesperson told Cointelegraph, in translation:

“We are very positive. Clear rules are expected to help institutional investors enter, leading to market expansion.”

BitPoint also expects more institutional investors to join the crypto movement and the market to expand further as crypto rules become clearer. However, the exchange has admitted that a review of the wallet management system will need to be undertaken in order to strike the right balance between security that entails the use of cold wallets and more user friendly, but less secure, hot wallets. BitPoint will therefore look to entrust fiat currencies to a trust company and receive a financial instruments business operator’s license.

Meanwhile, Coincheck, which just obtained an exchange license from the FSA in January, wrote in a translated email that the new laws are something it expected, also adding:

“By clarifying the target and standards of regulation through the current legal reform, we believe that it will lead to the healthy development of the cryptocurrency industry. On the other hand, there is also concern that the term change to crypto assets may be a setback for cryptocurrency as a means of payment. I would like to make an effort as an industry to make that not happen.”

The exchange has also said it would be closely monitoring the cabinet office orders that determine how the laws will be enforced in reality.

Ambiguity for wallet makers

AndGo, a Japanese-made hardware and mobile wallet development company, outlined some “ambiguity” in the new laws when speaking to Cointelegraph Japan.

AndGo points out that there are two kinds of wallet makers. One is able to move clients’ assets. It will be viewed as a custodian wallet and required to be registered with the FSA, as in the case of exchanges. The other type doesn’t possess clients’ private keys, hence can’t move clients’ assets. The new law doesn’t apply for the latter type.

As AndGo explained the issue, its wallet is of the second type, so it should not be subject to the new laws. However, the laws are unclear about the cases in which it holds one of the private keys (as with multi-sig) and a private key that clients encrypts by setting up their own passwords. In those cases, wallet makers cannot move clients’ assets solely by their own volition. According to a translation of a correspondence with AndGo:

“The details and interpretation of this regulation are often vague, and I think that wallet operators will have to ask the FSA individually about gray areas in the future.”

However, AndGo understands that regulators don’t often catch up with the rapid pace of technological innovation, writing:

“While entrepreneurs develop their service products by looking years ahead, regulators focus on technologies and services that were released years ago.”

After attempting to get ahead with crypto regulation, Japan witnessed two major hacks in 2018. Protecting crypto customers and investors has become a priority, and those who have enough funds to comply with the regulation may be at an advantage. In contrast, it may become harder for crypto entrepreneurs to enter the industry. The FSA, in the comment to Cointelegraph Japan (translated into English), addressed some of the concerns, however:

“We think the balance between customer protection and innovation is important. We continue to prioritize customer protection and other regulations where appropriate, while making sure that they will not be too much for the industry to grow further.“

Ahead of the enforcement day, the FSA is going to release government orders including a Cabinet Office Ordinance, which determines how the law will be enforced. At the same time, it will seek public comments on its website regarding the orders, one month before the implementation. It is not yet clear what the FSA will include in the government orders, but one of them is expected to be about the rate of margin trading.

Moreover, according to the FSA, many elements of Japan’s new laws are included in the recently published IOSCO’s document, which will be used in the upcoming G-20 meeting in a discussion surrounding crypto regulation. The FSA hopes to “share Japanese experiences with G20 members and deepen the mutual understanding.”

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Japanese Financial Services Agency Approaches Crypto ETFs With Caution, Cites Volatility

The Japanese Financial Services Agency showed a cautious approach towards cryptocurrency-based ETFs.

The Japanese Financial Services Agency (FSA) showed a cautious approach towards cryptocurrency-based exchange-traded funds (ETFs) in comments at the finance committee of the upper house of the National Diet on May 30. Cointelegraph Japan reported on the comments earlier today.

Per the report, local politician Takeshi Fujimaki noted during the meeting that he expects a crypto-based ETF to be approved in the United States, citing both positive and negative statements released by United States Securities and Exchange Commission commissioner Hester Peirce. He then noted that such a product would be an important development and that Japan should not be left behind other countries in this regard.

Fujimaki also reportedly addressed hacking, stating that — in the case of ETFs — crypto assets would be entrusted to banks and kept by custodians. Furthermore, he claimed that the introduction of such an asset would result in growth for the market by making institutional investment easier, resulting in lower volatility.

However, an FSA representative reportedly showed opposing views during the meeting, claiming that cryptocurrencies such as bitcoin (BTC) lack intrinsic value, which could result in unbearable price volatility. Fujimaki answered, reiterating his idea that an ETF would diminish the volatility of cryptocurrencies and make it easier to invest in an asset that he deems desirable and necessary.

As Cointelegraph recently reported, the Japanese House of Representatives has passed new crypto regulation in the upper house of the National Diet.

In April, Japan’s Minister of Finance and deputy prime minister Taro Aso urged reporters to stop using the term virtual currencies and switch to the newly-proposed legal name crypto assets.

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Taotao: Yahoo-Backed Exchange Enters Japan Market Amid Renewed Interest in Crypto

New Yahoo-backed crypto exchange Taotao is expected to go live on May 30.

Japanese cryptocurrency exchange Taotao is expected to go live at noon on May 30, as per the company’s official Twitter page.

Notably, the new trading platform is heavily backed by Yahoo Japan, marking the local internet giant’s arrival into the field of crypto. The timing seems to be on point, now that the market has finally shaken off the bear. But how likely is Taotao to dethrone its competitors — both current and those to come — in a complex market such as Japan?

What is Taotao, and how exactly is Yahoo involved?

The Yahoo Japan-backed platform was first mentioned in March 2018, when local newspaper Nikkei Asian Review reported on the corporation’s plan to acquire 40% of BitARG, a Tokyo-based cryptocurrency exchange, and to subsequently launch its own full-fledged platform “in April 2019 or later.”

Reportedly, the purchase of BitARG shares would be made through Tokyo’s YJFX, a retail foreign exchange broker wholly owned by Yahoo Japan, Nikkei revealed. Yahoo Japan, in turn, is a joint venture run by American internet company Yahoo and Japanese holding company SoftBank. It is reportedly the largest internet provider and payment processor in the ‎country, which surpasses Google and PayPal in the respective fields.

Initially, BitARG denied such a deal was taking place, but the acquisition was soon confirmed both by Yahoo Japan and BitARG. According to different reports, the 40% stake cost the internet corporation between 2 and 3 billion yen (around $19-27 million).

As per Nikkei, YJFX senior managers and engineers were sent to BitARG in April 2018. Their mission was reportedly to develop the new exchange system and work “on a corporate governance structure, a customer management system and internal controls.” The new exchange was expected to be “newly built but based on BitARG’s system,” the media outlet clarified.

Starting from March 2019, prospective users could sign up for a Taotao account and participate in a promotional giveaway scheme. The platform had originally planned its debut in mid-May but then postponed the launch at the last minute without explaining the reason.

The exchange will be open for Japan-based clients only. It is not clear whether it ever intends to expand to other countries. Cointelgraph reached out to Taotao for further comment, but the company has not produced a statement as of press time.

The FSA license is already in place — and Taotao is ready to trade

Notably, BitARG had been cleared to serve in the Japanese market at the time it was purchased by YJFX. The exchange secured its license with the Financial Services Agency (FSA) — the national financial regulator — back in December 2017, meaning that Taotao automatically obtained the permission to trade cryptocurrencies.

“It’s not so much entering the market but re-entering it, using the marketing expertise and financial muscle of Yahoo Japan,” as Maurizio Raffone, founder and CEO of Finetiq Limited, a Tokyo-based management consulting company, explained to Cointelegraph.

As per Japan’s Payment Services Act, amended in April 2017, all digital currency exchanges in the country are required to be registered with the FSA. The agency has granted the most compliant players with licenses.

It seems safe to assume that Taotao took the easy path to the local market — the FSA is known to have a tight grip on crypto exchanges operating on Japanese soil, and securing a license from scratch is a lengthy and complicated process. In fact, as many as 190 new exchanges were reportedly pending the agency’s approval to enter the market in December 2018.

The strict scrutiny comes as no surprise, given that the country has witnessed the two largest crypto hacks in history: namely, last year’s $532 million Coincheck break-in and the notorious crash of Tokyo-based Mt. Gox.

In the wake of these security breaches, the watchdog has been taking numerous precautions, including on-site inspections of exchanges’ offices and mandatory risk management system reports. Most recently, the FSA was reported to be in the midst of a crack down on crypto exchanges that offer anonymous transactions or have weak identity verification practices in preparation for inspection by the Financial Action Task Force (FATF) this fall.

Despite already having a license, Taotao should still keep in mind the FSA’s firm requirements, Raffone told Cointelegraph:

“The FSA’s requirements for crypto exchanges are becoming more and more stringent and over time one can expect them to converge with the high standards of the traditional securities industry. Having said that, with the rising costs of compliance and cybersecurity eating away at crypto exchanges’ profitability, the business model architecture for Taotao would need to have suitable margins to ensure its sustainability.”

Notably, the watchdog’s tough supervision has prompted some major players to quit the Japanese market. For instance, Binance, one of the world’s largest crypto exchanges that had once opened its office in the country, turned to Malta — the famously crypto-friendly state — after the Japanese regulator had slapped it with a warning in March 2018. Similarly, local social messaging app Line has also decided to exclude the domestic market prior to the launch of its cryptocurrency exchange, citing local regulatory difficulties.

As of now, the majority stake (60%) in Taotao still belongs to CMD Lab, BitARG’s parent company, which had wholly owned the exchange prior to the deal with YJFX. Neither company has responded to Cointelegraph’s requests for comment.

According to Taotao’s website, the new exchange will initially trade bitcoin (BTC) and ether (ETH), with margin positions available in three additional cryptocurrencies: litecoin (LTC), bitcoin cash (BCH) and XRP.

Additionally, Taotao is a member of Japan Virtual Currency Exchange Association (JVCEA), a self-regulatory body comprised of domestic industry participants.

Taotao picks best time to enter the market — but harsh competition awaits

Notably, Taotao seems to be entering the market in the midst of reignited interest from Japanese cryptocurrency holders. As Cointelegraph Japan reported earlier last week, local digital asset exchanges have seen new account openings increase up to 200% in the past two months. More specifically, data obtained from three large trading platforms — Bitpoint, DMM Bitcoin and Coincheck — showed a major increase in interest from entry-level investors since the end of March.

The change in habits among those who presumably did not use cryptocurrency before indicates the impact of rallying prices on public interest, which rose with the return of a bull market.

“Given the positive momentum in crypto prices following the so-called crypto winter, I think it is certainly a good time for Taotao to take advantage of this upswing,” Raffone told Cointelegraph.

J. Maurice, representative director for Tokyo-based WIZ K.K., also agreed that the timing is especially advantageous for the Yahoo Japan-backed cryptocurrency exchange, given that “it’s the beginning of a new bull run market cycle.”

However, Maurice warned that the Japanese public might still be hesitant to leave the long-established trading platforms for the new exchange.

“I can’t see bitFlyer losing their spot at #1 anytime soon,” he told Cointelegraph.

The largest exchanges Taotao will face off against in terms of trading volumes “are probably bitFlyer and Liquid,” Raffone confirmed — noting, however, that Taotao’s business model might be different, given that it is backed by a tech juggernaut:

“Its position within the Yahoo Japan’s vast digital ecosystem means it is best suited to support the development of crypto-related services for Yahoo Japan. Therefore, I would say that its closest competitors are Rakuten Wallet and Line Corp’s BitBox, both of which are owned by large tech companies.”

Thus, according to Raffone of Finetiq, Taotao “certainly has a good chance to establish itself as a leading exchange,” however, it will need to be able to leverage Yahoo Japan’s extensive digital footprint and customer base to do so:

“I don’t really see users switching accounts to Taotao from existing exchanges, but Taotao is uniquely positioned to bring new clients to the crypto space from Yahoo Japan’s mainstream businesses.”

Nevertheless, Taotao should also keep in mind that other large players are on the verge of entering the Japanese market. The most notable examples here would be the United States-based Coinbase, which originally planned to establish its operation in Japan within 2018, but is still waiting for the FSA’s approval, and Rakuten Wallet, backed by the eponymous e-commerce giant, which plans to make its market debut this summer.