May 2020

Xangle Research Crypto Asset Market : Japan in 2019-2020

A Regional Overview & Updates

Powered by Xangle, the official disclosure platform. [email protected] http://xangle.io More people are participating in crypto markets every month. # of registered accounts has risen by 13%, and # of operating accounts* has risen by 30.4% from Sep 2018 to Dec 2019

(Mil) 3.5

3.0

2.5

2.0

1.5

1.0 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19

Registered account Operating account

Source : JVCEA

* Operating Accounts: Exchange accounts with balances or accounts that were used for trading BTC is the most dominant spot trading pair in Japan represented approx. 60% of all crypto trades in September 2018. The figure increased steadily to 80%+ by end of 2019.

Rising BTC proportion in trading value Proportion of BTC in total trading value: 87.93%

Proportion of currencies in spot trading In December of 2019

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Other

BTC XRP ETH BCH MONA LTC Other

Source : JVCEA Source : JVCEA But the Japanese share of Bitcoin (BTC) is in decline (vs Global) As of May 7th, 2020, Bitcoin purchases in JPY (Japanese Yen) is 7.31% of all fiat purchases. The market share had surged in 2015-2016, only to readjust over the following years.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

JPY USD USDT QC EUR KRW USDC Source : Cryptocompare Majority of trading for Japanese crypto assets happen within Japan. ZAIF and MONA are under development in Japan (97%+ volume in JPY).

XCP ZAIF MONA 0.0% 0.2% 2.1%

100% 99.84% 97.93% JPY Other JPY Other JPY Other

QASH BTC XRP 6.77% 2.51% 27.14%

72.9% 93.2% 97.5% JPY Other JPY Other JPY Other

XEM BCH ETH 1.80% 0.51% 0.23%

98.2% 99.5% 99.8% JPY Other JPY Other JPY Other Margin trading is a much larger market in Japan (vs Spot) Margin trading volume is 10 times that of spot trading volume. Both margin and spot volumes are in decline.

Spot trading has declined since 2019 Margin trading value reached 3 trillion JPY in Dec 2019.

Spot trading volume and value Margin trading volume and value

(Bil) (JPYb) (Bil) (JPYb) 2.5 14,000 10 1,400 BTC price BTC price 9 12,000 1,200 2.0 8 10,000 7 1,000 1.5 6 8,000 800 5 600 6,000 4 1.0

3 400 4,000 2 0.5 200 2,000 1 0 0 0.0 0

Spot trading value (Right) Spot trading volume (Left) Margin trading value (Right) Margin trading volume (Left) * Note: 2x margin trading will be the limit for Japanese investors when the revised law is enforced. Source : JVCEA Source : JVCEA Financial Summary of Crypto Exchanges in Japan* (JPY) Exchange Established in # of coins listed Financial Year Revenue Operating Income Net Income bitFlyer Jan 2014 9 2018 1/1~12/31 14,085,000,000 5,335,000,000 2,146,000,000

DMM Bitcoin Nov 2016 9 2018 4/1 ~ 2019 3/31 5,068,270,000 982,526,000 761,467,000

GMO Coin Oct 2016 8 2019 1/1~12/31 3,954,000,000 971,000,000 452,000,000

Coincheck Aug 2012 12 2018 4/1 ~ 2019 3/31 2,115,000,000 (2,636,000,000) (2,743,000,000)

bitbank May 2014 6 2019 1/1~12/31 1,555,849,000 (56,664,000) (63,815,000)

ZAIF Apr 2016 12 2019 1/1~12/31 624,474,000 (798,053,000) (802,327,000) (owned by FISCO) (FISCO)

BITPoint Mar 2016 5 2018 4/1 ~ 2019 3/31 508,000,000 (1,228,000,000) (1,775,000,000)

LastRoots Jun 2016 1 2018 5/1 ~ 2019 4/30 447,007,000 (322,312,000) (463,283,000)

Huobi Japan Sep 2016 6 2018 4/1 ~ 2019 3/31 42,069,000 (159,356,000) (183,734,000)

BTCBOX Mar 2014 4 2018 4/1 ~ 2019 3/31 11,872,000 (316,552,000) (289,122,000) Rakuten- Dec 2016 5 2019 1/1~12/31 11,271,000 (1,023,506,000) (1,016,231,000) Wallet SBI VC Trade Nov 2016 3 2018 4/1 ~ 2019 3/31 2,177,280 488,323 268,799

DeCurret Jan 2018 5 2018 4/1 ~ 2019 3/31 500,000 (1,341,628,000) (1,345,384,000)

TaoTao May 2017 5 2018 1/1~12/31 0 (92,372,186) (99,258,808)

BITMAX Jan 2018 5 2018 1/1~12/31 0 (2,678,224,000) (2,697,012,000)

Bitgate Mar 2010 1 2018 3/1 ~ 2019 2/28 (19,271,000) (376,062,000) (367,356,000)

Source : JVCEA, Company data

* Liquid, which has the biggest trading volume in Japan according to bti.live, does not disclose its financial statements. bitFlyer recorded the highest revenue and operating/net income. DMM Bitcoin and GMO Coin ranked second, and third, respectively.

(JPYb)

3

bitFlyer 2

DMM Bitcoin 1 Japan SBI VC Trade ZAIF(owned by FISCO) GMO Coin 0 (JPYb) (4) (3) (2) (1) 0 bitbank 1 2 3 4 5 6 7 BTCBOX

(1) Rakuten-Wallet DeCurret

LastRoots BITPoint (2)

Coincheck (3)

(4)

Source : JVCEA, Company data

* Note : 1) Size of the = revenue ; X-axis = Operating income; Y-axis = Net income 2) Liquid’s numbers are not available ; Bitmax and Bitgate are excluded as they recorded negative revenues DMM Bitcoin showed notable growth YoY DMM Bitcoin saw significant revenue growth and managed to turn a profit (both operating & net income). GMO coin is another exchange that managed a profitable year.

DMM Bitcoin improved on all fronts GMO Coin recorded an increase in operating income

DMM Bitcoin GMO Coin

(JPYb) (JPYb) 6 5 +176.4% y-y 5 -1.6% y-y 4 4

3 3

2 2 +407.8% y-y 1 +334.4% y-y +19.3% y-y 1 -12.9% y-y 0 Revenue Operating income Net income 0 (1) Revenue Operating income Net income

DMM Bitcoin FY 2017 DMM Bitcoin FY 2018 GMO Coin FY 2018 GMO Coin FY 2019 * Note: FY2017 : 2017 4/1 – 2018 3/31, FY2018: 2018 4/1 - 2019 3/31 * Note: FY2018 : 2018 1/1 - 12/31, FY2019: 2019 1/1 - 12/31 Source : bitcoin.dmm.com Source : coin.z.com Overview of whitelisted assets Crypto assets must be approved by the JFSA* and JVCEA* before listing & trading (whitelist). Exchange tokens account for 22% of all whitelisted assets but show limited trading volume. Projects operating out of Japan account for 36%, but MONA is the only asset to be listed in 2+ exchanges.

New (2020) Exchange token Based in Japan

* .

* Note 1: Japan Financial Services Agency, Japan Virtual Crypto-assets Exchange Association. * Note 2: Huobi Token (HT) has been approved by FSA and will list on Huobi Japan in the near future. JVCEA has not added HT to its whitelist yet (as of May 8th, 2020) Crypto Asset Whitelisting in Japan 17 members of JVCEA have listed 22* crypto assets.

NCXC BTC ETH BCH XRP LTC MONA XEM XLM ETC LISK BAT COSMA FISCO NXCX QTUM c0ban QASH CAICA ZAIF XCP FCT JPYZ O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O January 2020

Thank you.

1. Market overview 2. Regulation (Coming soon) 3. Traditional financial entities entering crypto market

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