Bitcoin Exchange Kraken Launches in Japan
Bitcoin exchange Kraken will launch in Japan today, aiming itself at the nation's large number of active traders and finance professionals.
In its announcement, the company highlighted the strength of Kraken's security and engineering team, as well as its high trade volumes and reputation for compliance.
Gaining public trust is a high priority for any bitcoin business planning to establish a Japanese base, given the local media's tendency to highlight the digital currency's association with Mt Gox and Silk Road.
The new managing director of Kraken in Japan, Ayako Miyaguchi, told CoinDesk the company's ability to handle larger volumes will be the main drawcard for Japanese users, especially professional traders who may not have experimented with bitcoin yet.
"That's what we can do better than the smaller exchanges," she said.
Kraken's proven history operating from the US also gave it confidence when establishing essential relationships with banks and local regulators such as the Financial Services Authority (FSA).
Now is a good time to open a new exchange in Japan, Miyaguchi added, since businesses are in need of an exchange they can trust and regulators simply want to avoid another Mt Gox-like situation.
"We have a proven history in places like Europe, so we're not just saying we're good, we actually have been successful ... We can be a model, we can lead the industry."
The Kraken team, especially Miyaguchi, have been instrumental in forming Japan's new bitcoin industry group, the Japan Authority of Digital Asset (JADA), and have met with government representatives on several occasions.
Kraken's launch in Japan has been a while coming, with a few false alarms along the way.
While the company has always intended to set up shop in the world's third-largest economy, the length of time it took to realise that ambition highlights the fact that setting up a bitcoin exchange in a new market is no simple process.
The initial plan was to launch in Japan at the beginning of the year, but the Gox debacle forced a postponement. Japan's society simply wasn't ready at that point, and there was a need to build trust, the exchange indicated.
CEO Jesse Powell has also highlighted the struggle Kraken and other bitcoin companies have faced with banks in the past. Notably, his company has just this week reinstated USD deposits and added GBP deposits and withdrawals after losing its US banking partner in February.
With the new Japanese operation and availability in the UK, Kraken will focus on two potentially lucrative markets.
The US, however, remains problematic for bitcoin exchanges. Though based in San Francisco, the company considers the US a "low priority" and has focused instead on overseas markets, particularly the Eurozone, where its trade volumes are highest. Its new banking partner in Luxembourg also handles deposits in USD and GBP.
Bitcoin making gains
Bitcoin growth in Japan is looking healthy despite the early image setbacks, with a number of companies opening for business in the past few months.
Current bitcoin exchanges in the Japanese market include the simple brokerages BtcBox, BitFlyer and Pay-Bit, plus the pan-Asian trader-focused exchange Quoine, which operates a Japanese language site. Together with payment processors Coincheck and Bitbank, they all allow deposits and withdrawals for Japanese banks.
However, Japanese consumers can be conservative and have high customer service expectations, Miyaguchi said, making it essential to offer both the exchange's online services and customer support in the native Japanese language.
Kraken received $5m in Series A funding from Hummingbird Ventures in March. Later that month it produced one of the world's first cryptographically verifiable proof of reserves audits showing it held 100% of the bitcoins its records claimed.
Japan image via Shutterstock
Bitcoin Gambling Site SatoshiBet No Longer Accepting US...
Ex-SEC Chief: Bitcoin Companies Need Compliance To Succeed