A Turning Point for Japan's Cryptocurrency Industry: What Future Does JVCEA's Representative Director Envision? | Interview with Genki Oda

Summary

【Regulatory Information】Summary of the 'Cryptocurrency System Working Group' Report

As the chairman, how would you describe the current 'atmosphere' in the cryptocurrency industry in a single word?

Genki Oda (hereafter, Oda): If I were to summarize it in one word, it would be 'change'.

This industry fundamentally demands significant change. It's not just about riding the boom, but about how well businesses can transform themselves in response to these changes. This is a clear turning point that will determine the growth of operators.

This 'change' is not only occurring within the framework of the cryptocurrency industry. It is bringing transformation across all industries and rewriting the standards of society as a whole. That is the true nature of the 'change' we are currently facing.

What are the major differences in revenue structures between domestic and foreign exchanges?

Oda: The primary revenue model for current domestic exchanges centers on transaction revenue from buying and selling cryptocurrencies. Looking back, sales revenue from transactions accounted for 80%, and at times nearly 100%, of total revenue.

On the other hand, transaction revenue accounts for only about 50-60% of the total at foreign exchanges. For example, at Coinbase, currently about 40% of total revenue comes from sources other than transactions.

The breakdown includes staking rewards, fees associated with token issuance, and shares of post-issuance profits. Thus, foreign exchanges are characterized by their reliance not merely on transactions but on building stable and diverse sources of revenue.

As Japanese exchanges maintain security and revenue, the structure of having both 'exchanges' and 'sales outlets' seems unavoidable. Do you have any plans to adjust the operation methods and revenue structures in Japan based on foreign models through JVCEA?

Oda: I often hear that the difference between 'sales outlets' and 'exchanges' is problematic, but this is also related to unique circumstances in the Japanese market. The fact is that Japanese customers tend to prefer the 'sales outlet' model.

Indeed, global exchanges like Coinbase and Kraken have entered Japan, but bringing in successful global models has not always met expectations.

The reality is that many Japanese users ultimately choose the more convenient sales outlet model. Additionally, the scale of Japan's cryptocurrency market is not as large as it once was. There was a time when it accounted for about 50% of the global share, but it has now shrunk to about 1%.

Factors such as the slow pace of new coin reviews and constraints on leverage ratios have contributed to sluggish trading volumes. However, the review system itself has significantly improved in recent years. Currently, the number of domestic coins handled has increased to nearly 100, and the situation has changed significantly from the past.

Thus, the essential issue may not be the 'lack of coins' per se, but rather that domestic trading volumes have not grown sufficiently.

Additionally, looking at recent examples like the SBI Group, revenue sources have become quite diversified. Recently, staking rewards account for about 20-30% of total revenue, and in some cases, even more.

In that sense, properly addressing staking and similar activities could become a significant source of revenue in the future.