Japan’s Monex Group Flags Blockchain, ICO Ambitions

The brokerage reveals annual results of battered subsidiary Coincheck

by Maya Bogdanova
27 April • 2 min
In Markets

Japan-based online trading services provider Monex Group plans to build its own blockchain platform and conduct an Initial Coin Offering (ICO), the company said on Thursday.

“Japan segment will use blockchain technology for the aim of executing all the trading of financial products and every financial transaction in safety and at low cost. Creating our own blockchain and its ICO are in the scope,” Monex said in its full-year financial report, describing its mid-to-long-term initiatives.

The announcement comes days after Monex completed a JPY 3.6 billion yen (USD 33.6 million) acquisition of Coincheck, a Japanese cryptocurrency exchange that lost over USD 530 million worth of customer XEM tokens in a hack at the end of January.

Prior to the theft, Coincheck was reporting high profits, earning JPY 52.2 billion yen from April 2017 through January 2018. Monex Group disclosed in today's filing that the exchange platform made a JPY 6.3 billion pre-tax profit for the fiscal year ending March 2018, after posting an "extraordinary loss” of JPY 47.3 billion. Although Monex did not reveal what led to the loss, Coincheck has previously said it will refund investors around JPY 46 billion for holdings lost in the hack.

The total value of cryptocurrency trading in Japan increased to JPY 69.1 trillion (USD 636.3 billion) in fiscal 2017. The Coincheck hack, however, has hampered the industry. Earlier this week, a group of 16 licensed Japanese cryptocurrency exchanges launched a self-regulatory body in a bid to restore market confidence. Japan’s Financial Services Agency (FSA) has also acted to protect the market, introducing tighter regulations for exchanges, including developing and implementing improved data security measures.



"Japan's exchanges do both matching and custodial services - they're close to a bank. To someone in the financial industry like myself, it's common sense that regulations will get stricter,” Monex CEO Oki Matsumoto told Reuters in an interview published on Friday.

The purchase of Coincheck is not Monex’s first move into the cryptocurrency business. The group has invested in crypto startups such as Logica, the operator of multi crypto portfolio management tool Coinboard, and Popshoot, another crypto asset management startup. Last year, Monex also established Monex Crypto Bank to launch a new cryptocurrency exchange in Japan. Earlier this year, the brokerage launched Monex Cryptocurrency Laboratory to provide up-to-date and easy-to-understand information on digital assets.