Tokyo's BitFlyer Acquires FTX Japan, Aims For Crypto ETFs

Tokyo-based BitFlyer Holdings announced the full acquisition of FTX Japan, securing all outstanding shares and integrating it as a wholly owned subsidiary. This strategic move aims to enhance BitFlyer’s crypto custody services and position it as a leader in the upcoming cryptocurrency spot exchange-traded funds (ETFs) market in Japan.

Details of the Acquisition

BitFlyer, licensed by Japan's Financial Services Agency since 2017, is ranked 22nd globally by trading volume, primarily driven by BTC/JPY transactions. The acquisition of FTX Japan was announced by Yuzo Kano, CEO of BitFlyer Holdings, in a Friday post on X. 

Kano emphasized the importance of security technology in safely storing physical BTC, which will serve as the backing asset for future ETFs.

Strategic Goals and Institutional Custody

The acquisition aligns with BitFlyer’s strategic goals on two main fronts. 

• Firstly, the company aims to enhance its crypto custody services with advanced security features designed for institutional investors. 

   

• Secondly, BitFlyer plans to offer services related to cryptocurrency ETFs, contingent on the establishment of appropriate legal frameworks in Japan.

Kano's Vision for Crypto ETFs in Japan

Kano expressed optimism about the timeline for launching crypto ETFs in Japan, drawing parallels with the United States, where institutional investment has surged following the introduction of Bitcoin ETFs. He highlighted that ETFs can significantly contribute to the price appreciation of underlying crypto assets. 

In the US, Bitcoin ETFs accounted for about 75% of new investment in the cryptocurrency by February 15, 2023, as it surpassed the $50,000 mark.

Enhancing Security and Institutional Investments

Upon rebranding and integrating FTX Japan, BitFlyer will concentrate on launching a crypto custody business primarily targeting institutional investors. This service will emphasize high-security measures to protect digital assets. 

An official statement from BitFlyer reads: 

“Our extensive expertise in blockchain technology and our proprietary security-focused wallet solution reinforce our commitment to securing institutional investments.”

FTX Japan's Background and Financial Status

Following the acquisition of fintech company Liquid Group and its subsidiaries, including Quoine Corporation, FTX Japan was launched in June of 2022. 

However, just five months later, its parent company collapsed amid allegations of embezzlement and misappropriation. Despite this, FTX Japan reported having more assets than liabilities, with $134 million in segregated user assets, raising hopes for recovering funds for Japanese customers.