Yuzo Kano, chief executive of major Japanese exchange bitFlyer is trying to build a global cryptocurrency powerhouse, one former financier at a time.
The Goldman Sachs Group alumnus who made bitFlyer Japan’s largest bitcoin exchange has doubled his staff in the past six months in a bid for global expansion. His team, which is expected to reach 300 this year, includes a fixed income chief at Barclays Plc and a former Credit Suisse Group AG senior private banker, according to Bloomberg.
Kano has taken advantage of Japan’s cryptocurrency deregulation whereby exchanges are now licensed by the country’s securities regulator, enhancing their credibility. Kano views Japan as the best place to launch a global operation.
A former convertible bonds and derivatives trader, Kano said he has to expand his staff to become the top exchange, and the skills he needs usually come from global banks.
BitFlyer is already the fourth largest exchange behind BitMex, Binance and OKEx, according to data from Bloomberg, Coinhills and Coinmarketcap.com.
Its transactions averaged around $2 billion daily in late April and early May, due to bitcoin margin contracts favored by Japan’s day traders. The exchange’s users tripled to 2 million in the past year.
With offices in Tokyo, San Francisco and Luxembourg, Kano hopes to open offices in Australia, South America, Africa and Asia. He also plans to expand into digital payments and a broker advisory service for startups interested in ICOs. His strategy resembles that of fellow Goldman alumnus Mike Novogratz, who recently launched a New York crypto merchant bank.
Many would agree with Kano that former traders and bankers bring good backgrounds to crypto since they know how to work in regulated markets. This is becoming more important as governments learn more about crypto. Last month, bitFlyer strengthened its AML rules when a Nikkei newspaper revealed that users can conduct limited functions without fully fulfilling customer verification.
Crypto players need finance talent for business development, account management, operations, sales, compliance and other areas, agreed Razin Ashraf, the head of the Divine Solutions Japan recruiting firm.
In his bid for talent, Kano is sweetening the pot for recruits.
Coders at bitFLyer can command $100,000 with only a high school education, providing they have a good track record from coding tournaments and hackathons.
There are “plenty” of people at the company making over $200,000, Kano said, adding that BitFlyer’s top finance recruits include bankers in their 40s who are tired of bureaucracy and younger people disillusioned with the industry and anxious to join a startup.
All full-time employees get stock options they can cash out without waiting for bitFlyer’s planned IPO.
Kano’s recuitment moves makes good sense given that more Wall Street firms are entering the crypto space.
Goldman Sachs is planning to launch a bitcoin trading business, while Intercontinental Exchange Inc., which owns the New York Stock Exchange, is reportedly creating a platform to allow investors bet on the cryptocurrency. SBI Holdings Inc. and Monex Group Inc. in Japan are also investing in crypto.
Not all indicators are positive, however.
Average daily turnover at global crypto exchanges declined to $9.1 billion in April from $1 billion in December. According to CryptoCompare, major tokens fell more than 50% from their highs. In addition, Google searches for “crypto” and “bitcoin” have fallen by over 70% since late last year.
Bitcoin nonetheless is up more than 1800% over two years and ICOs continue to expand despite rising regulatory activity. Wall Streeters are having a hard time ignoring the excitement after watching the 2005-2007 prosperity give way to the global financial crisis
Daisuke Murayama, a 35-year-old former Barclays trader who took a pay cut to joined bitFlyer in February, said he did not see a future in traditional finance.
Featured image from Shutterstock.