[NEWS] bitFlyer Acquires FTX Japan, Aiming to Provide Custody and Crypto Asset Spot ETFs

On the 20th, domestic cryptocurrency exchange bitFlyer announced that it had signed an acquisition agreement with FTX Japan. The acquisition amount is expected to be several billion yen.

bitFlyer will acquire 100% of FTX Japan's shares. It will take over management of FTX Japan in the future. In addition, FTX Japan, the subject of this case, is subject to litigation proceedings in the Delaware Bankruptcy Court, and this agreement will require approval from the U.S. Bankruptcy Court.

In November 2022, FTX Trading Ltd., FTX Japan, FTX Japan Holdings and related debtors filed a voluntary petition for relief under Chapter 11 in the United States.

Currently, the debtors have filed related motions to approve the execution and completion of this agreement, which will be deliberated through a debtor hearing scheduled for July 17. Upon completion of this case, FTX Japan will be removed from the subject of Chapter 11 litigation proceedings.

FTX Japan is a subsidiary of FTX Japan Holdings and was acquired from FTX Tradings Ltd. in April 2022. FTX Japan is under the supervision of the Financial Services Agency and the Kanto Regional Financial Bureau, and operated a cryptocurrency exchange, including derivatives trading, in Japan until the collapse of FTX Tradings.

FTX Japan has not operated a cryptocurrency exchange since the filing date, but customer assets are managed separately, and all customers have been able to withdraw cryptocurrency and fiat currency since early 2023.

Aiming to provide custody and cryptocurrency spot ETFs

Based on the terms of the share transfer agreement, FTX Japan will change its name. At this time, the new company name has not been decided, and will be referred to as the new custody company as a tentative name.

The new company will transfer accounts to bitFlyer with the consent of customers. The new custody company plans to newly launch a crypto custody (cryptocurrency deposit) business as its core business.

In addition, the new custody company will focus on its core business and aim to provide cryptocurrency spot ETF-related services in the future if domestic legal systems are established. Depending on the business and services provided by the new custody company, it will maintain its licenses for cryptocurrency exchange and type 1 financial instruments business.

The basic policy of developing crypto custody business as a core business is based on the demand for institutional investors to enter the cryptocurrency market and the demand for specialized security measures.

The SEC (US Securities and Exchange Commission) approved a Bitcoin spot ETF in January this year, and it has been a great success since trading began. Although the circumstances are different in Japan and the US, bitFlyer explains that it is expected that institutional investors' demand to enter the cryptocurrency field will increase in Japan as well, and crypto custody services will become more important.

In Japan, if a cryptocurrency spot ETF is approved, it is also considering providing cryptocurrency spot ETF-related services that meet the needs of financial institutions such as trust banks. The new custody company will provide crypto custody services and crypto asset spot ETF-related services, aiming to provide value that is unique to the bitFlyer Group.

Reference: Announcement
Image: bitFlyer website

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