Japan’s financial giants gear up for crypto exchange push

Japanese investment firm Metaplanet has increased its Bitcoin holdings, purchasing an additional 20.195 BTC for approximately 200 million yen ($1.2 million), as announced after the Tokyo Stock Exchange closed on Monday. This acquisition brings the firm's total holdings to 161.2677 BTC, valued at over $10.1 million. According to The Block, the recent purchase is part of a broader strategy, initiated with the company's decision to allocate 1 billion yen ($6.3 million) for Bitcoin acquisitions funded by an upcoming bond issuance. This move follows a previous buy in June worth 250 million yen.Photo by Traxer on UnsplashStrategic investment responseMetaplanet's investment strategy mirrors that of U.S.-based MicroStrategy, which has significantly integrated Bitcoin into its treasury assets. MicroStrategy currently holds 226,331 BTC, amounting to more than 1% of the total Bitcoin supply. Citing economic challenges like high government debt and the depreciating yen, Metaplanet views Bitcoin as a hedge against economic instability. Following Metaplanet’s latest acquisition, its stock saw a 1% rise on Monday, with an overall increase of 233% since it began investing in Bitcoin. 

Huobi Anticipates Break-Even in Q3 Following Consecutive LossesCryptocurrency exchange Huobi, under the guidance of its advisor and Tron Founder Justin Sun, has reported losses over consecutive recent quarters and is now eyeing a break-even point in the current quarter.Photo by Brands&People on UnsplashThree quarters of lossesIn a tweet posted by Sun on Tuesday, the Tron Founder revealed that Huobi hadn’t registered a profit from the third quarter of 2022 through the second quarter of this year. While exact loss figures were not disclosed, Sun attributed these financial challenges to excessive spending on marketing, advertising, and employee salaries. Notably, Huobi has since reined in these expenses, positioning itself for a potential return to profitability by the fourth quarter.Looking at the overall financial performance of Sun’s crypto entities, Huobi and Tron, the group appears to be on an upward trajectory. Sun’s tweet indicated a combined profit of $85 million, derived from $193 million in revenues and $108 million in expenses.Notably, the Q2 profit saw a substantial increase of 183% compared to the $30 million profit in Q1. Sun’s projections suggest that Q3 could see revenue reach $200 million, expenses remain at $100 million, resulting in a projected profit of $100 million for the quarter.Improved financial outlookSun highlighted on Twitter Huobi’s improved financial outlook, projecting a break-even status for Q3 and a modest profit for Q4 based on conservative estimates. Earlier in the year, Huobi implemented a 20% reduction in its workforce as a response to the cryptocurrency market’s bearish trends.Established in 2013, Huobi had maintained consistent profitability until the last few quarters, according to Sun. He clarified that despite reports linking him as the core investor through the M&A fund that acquired a stake in Huobi, he is merely an advisor to the exchange.Exchange business challengesHuobi’s struggles and subsequent efforts to regain financial stability mirror the broader landscape of cryptocurrency exchanges navigating a volatile market. No major exchange has been unaffected by a challenging business and regulatory environment over the past year.US exchange Coinbase is in a legal battle with the Securities and Exchange Commission (SEC) in the United States. A report by Semafor on Wednesday suggests that the US Department of Justice is planning on bringing fraud charges against Binance, who is already fighting an action taken by the SEC. Binance has also been forced out of key four important European markets over the course of the past three months.Meanwhile, it has been claimed that KuCoin has been executing a layoff plan, something the company itself denies. In March, the company faced an action brought by the New York Attorney General on the basis of a failure to register as a securities and commodities broker-dealer.Huobi’s difficulties serve as a testament to the challenges and opportunities presented to all of the major international cryptocurrency exchange businesses.The company’s recent financial trajectory, marked by consecutive losses, has caught the attention of the industry. Justin Sun remains one of crypto’s most controversial figures, but with his guidance, the exchange will be working towards rebounding and returning to profitability in the coming quarters.

Research Center Highlights Overvaluation in Overseas Crypto Holdings Reported to Korean Tax AgencyThe Korbit Research Center, affiliated with one of South Korea’s leading cryptocurrency exchanges, Korbit, has raised questions about the size of overseas cryptocurrency holdings reported by Korean individuals and businesses to the National Tax Service.Photo by REDioACTIVE on PixabayThe issue of market-making activitiesThe center noted that following the 2017 initial coin offering (ICO) boom, many enterprises that issued cryptocurrencies through offshore entities might still be holding onto their native tokens. This would have resulted from their inability to distribute these tokens to the market after the speculative bubble burst. The center believes these reported values could have been influenced by the issuers’ market-making activities, possibly inflating their worth.According to the National Tax Service, Korean individuals and corporations hold a total of KRW 130.8 trillion (around $98 billion) in overseas crypto accounts. Notably, 73% (KRW 120 trillion) of this sum is held by 73 corporate entities.Highlighting a critical aspect of cryptocurrency valuation, the Korbit Research Center pointed out that when tokens are priced based on market-making activities, they may be overvalued. They further underscored that even if the true value of overseas holdings by these entities is only a tenth of the reported sum, a figure like KRW 12 trillion is still substantial.Retail investors seeking overseas optionsFurthermore, the center touched on retail investors, noting that the KRW 10 trillion in their offshore accounts indicates a gap in services offered by Korean crypto enterprises. It suggests that individual investors might be exploring foreign markets due to domestic limitations like the absence of derivatives and lending options.Given the borderless nature of the crypto industry, Korean individuals readily turn to overseas services that cater to their needs. The Korbit Research Center estimates a KRW 10 trillion unmet demand in the domestic crypto sector, suggesting that stringent local regulations might be driving capital outflows.