Sebastian Sinclair

<div id="highlights-block_62994a78320ac" class="highlights">
 <ul>
 <li>FTX can now service the Japanese crypto market which possesses a potential $1 trillion, CEO Sam Bankman-Fried said</li>
 <li>The exchange will offer both spot and derivatives products, courtesy of its Type 1 Financial Instruments Business license</li>
 </ul>
 
</div>



Cryptocurrency exchange FTX has expanded its presence to Japan following its acquisition of a regulated domestic marketplace earlier this year.



In February, FTX <a href="https://cms.blockworks.co/ftx-acquires-liquid-group-expanding-presence-in-japan/" target="_blank" rel="noreferrer noopener">acquired Japan-based fintech firm Liquid Group</a> and its subsidiaries, granting the exchange access to the firm&#8217;s Type 1 Financial Instruments Business license.



Formerly known as Quoine Corporation, FTX Japan K.K is expected to offer Japanese customers a platform for spot and derivatives trading.



FTX – ever hungry for more business – continues to gobble up crypto and blockchain companies as it hopes to position itself as the pre-eminent marketplace for crypto trading.



Last year, the exchange&#8217;s US arm bought crypto derivatives platform LedgerX to get its hands on Ledger&#8217;s license to offer bitcoin&nbsp;fractional derivatives contracts. The exchange acquired the mobile news and portfolio tracking app Blockfolio in 2020 before renaming it FTX a year later.



Its most recent acquisition has allowed FTX to piggyback off of Liquid&#8217;s status as an existing licensed cryptoasset exchange services provider in a move that was critical to FTX&#8217;s expansion in the country, FTX&#8217;s CEO Sam Bankman-Fried said.



&#8220;The acquisition not only gives us a technological advantage but also allows us to work directly with Japanese regulators in a transparent, constructive and positive manner,&#8221; Bankman-Fried said in the statement.



In January, FTX garnered an additional <a href="https://cms.blockworks.co/ftx-valued-at-32-billion/" target="_blank" rel="noreferrer noopener">$400 million</a> in funding via a Series C raise meant to broaden its services and acquisitions into international markets, allowing it to pick up licenses from domestic companies.



Japan&#8217;s &#8220;highly regulated market&#8221; for crypto trading possesses a potential $1 trillion, Bankman-Fried said, adding that his company would now be able to service the domestic market in both perpetual and spot trading.



&#8220;We look forward to further revolutionizing the Japanese digital asset ecosystem through FTX Japan,&#8221; he said.



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Crypto Exchange FTX Launches in Japan Following Domestic Acquisition

<div id="highlights-block_61fb1b4524ad5" class="highlights">
 <ul>
 <li>FTX has acquired fintech firm Liquid for an undisclosed sum and will work with it to provide crypto products to Japanese customers</li>
 <li>CEO Sam Bankman-Fried said his company has reached out to regulators to initiate a dialogue</li>
 </ul>
 
</div>



Sam Bankman-Fried&#8217;s FTX has acquired fintech firm Liquid Group and its subsidiaries for an undisclosed sum in a bid to navigate Japan&#8217;s rigorous crypto exchange laws.



The acquisition is expected to close in March 2022 following satisfactory and customary closing conditions, according to a <a href="https://blog.liquid.com/acquisition-liquid-ftx" target="_blank" rel="noreferrer noopener">statement</a> on Wednesday. Liquid and FTX are expected to work together to provide products and liquidity to both retail and institutional investors within the Japanese and global markets.



As part of the deal, FTX said it absorbed Liquid Group subsidiary Quoine, a fintech company headquartered in Japan with offices in Singapore and Vietnam. Quoine operates the Liquid exchange — not to be confused with the parent company — one of Asia&#8217;s largest crypto platforms by trade volume.



Quoine is among <a href="https://www.fsa.go.jp/en/regulated/licensed/en_kasoutuka.pdf" target="_blank" rel="noreferrer noopener">29 other</a> regulated exchange service providers operating under the country&#8217;s Payment Services Act. As part of Japan&#8217;s regulations, crypto exchange service providers need to be registered with the Financial Services Agency (FSA) and a corresponding local financial bureau.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We would be excited to work with the FSCA, and appreciate them for bringing this to our attention. We are not aware of any outreach from the FSCA but would be excited to engage with the FSCA to comply with SA requirements. We have reached out today to initiate a dialog.&mdash; SBF (@SBF_FTX) <a href="https://twitter.com/SBF_FTX/status/1488886463811014659?ref_src=twsrc%5Etfw">February 2, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Last year, Quoine was granted a Type 1 Financial Instruments Business registration by the FSA. A Type 1 gives intermediaries, including brokerages and exchanges, the legal runway to offer securities and derivatives.



&#8220;In connection with this acquisition, FTX has also entered into an agreement with Liquid to provide its existing Japanese users with services in compliance with Japanese laws and will transfer its existing Japanese users to Quoine, with effect from 30 March 2022,&#8221; the statement reads.



The move follows FTX&#8217;s $400 million <a href="https://cms.blockworks.co/ftx-valued-at-32-billion/" target="_blank" rel="noreferrer noopener">Series C</a> raise in January that will fuel its plans to broaden its services and acquisitions into international markets by gaining additional licenses. Details on specific regions under consideration were scant.



FTX&#8217;s funding round was the exchange business&#8217; third raise in six months.



<a href="https://www.bloomberg.com/news/articles/2022-02-02/japan-s-1-trillion-crypto-market-may-ease-onerous-listing-rules" target="_blank" rel="noreferrer noopener">Bloomberg reported</a> Tuesday that Japan&#8217;s Virtual and Crypto Exchange Association, a self-regulatory body sanctioned by the FSA, is considering making it easier to list more than a dozen cryptos at a time without a lengthy review process.



While a final decision on the change in listing rules in Japan is yet to be made, members from the self-regulatory body said current restrictions were stymieing industry growth, paving the way to a possible overhaul of the way crypto is screened in the island nation.



Blockworks attempted to contact FTX and Liquid but did not receive a reply by press time.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



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