January 6, 2020
Happy New Year from the bitFlyer Group
Happy New Year.
This month marks 7 years since our CTO, Mr. Komiyama, and myself founded bitFlyer
in January 2014. Thanks to everyone’s support, the corporate group now employs over
200 people and has grown to be Japan’s largest domestic virtual currency and blockchain
company.
I feel that 2019 was a year full of large changes in the virtual currency and blockchain
industry. We resumed our Japanese virtual currency exchange operations and listed ourfirst new virtual currency in almost 2 years. The industry was reshuffled as anticipatednewcomers entered the market and some businesses withdrew at the same time. The priceof Bitcoin nearly doubled during that time.
In addition to the virtual currency boom settling down, internal management costs
increased due to an increase in foreign and domestic regulations. As profits decreased,
there was news of layoffs and hard times for the industry. There were also scares ofrepeated hacking all over the world. Hacking prevention is definitely the most important
issue in our industry. bitFlyer took part in the launch of the Cryptoassets GovernanceTask Force (CGTF), and we shared and discussed some of our trade secrets on systemsettings and security in order to establish security guidelines for virtual currencies. We
sincerely hope to end hacking in our industry.
Libra got a lot of attention on a global scale. Although there was some sympathy for the
Libra Association’s vision for the next generation of payment processing and financial
inclusion, adherence to existing financial regulations will be unavoidable in order to win
everyone’s trust. G20 countries also held discussions on what regulations are required for
virtual currencies. The FATF, an international organization, published their travel rulefor confirming customer information among Virtual Asset Service Providers (VASPs) for
AML/CFT measures. In the near future, VASPs will need to adhere to and operate under
the travel rule while also adhering to Europe’s GDPR.
The bitFlyer Group laid 3 foundations in order to take a large step forward this year.
First, we were a pioneer as a virtual currency exchange operator that significantly
invested in building strong corporate governance.
Our internal auditing department focuses on financial auditing, IT auditing, separated
management auditing, business auditing, and performing internal audits as part of ourthree-line system. Our compliance department ensures compliance with laws, ordinances,and self-regulation from the JVCEA as well as performs internal training to realize athorough awareness of compliance. We also created a committee to examine new virtual
currencies under consideration for listing based on internal and JVCEA regulations. We
built our own Chinese wall to ensure that employees do not leak information on newly
listed virtual currencies with regulations that have severe penalties for any violations.

We have a plan to strengthen our internal regulations across the whole corporate groupas well as strengthen the authority of managerial committees. We redid all of our previous
ID verifications with stricter rules, as well as strengthened our standards for AML/CFT,deposit, withdrawal, and trade monitoring.
As for IT security, the most important operational issue for exchange operators, we madea significant investment under our slogan of “Security First.” bitFlyer was rated theworld’s most secure exchange by Sqreen.
In order to become a financial institution in our society, we strengthened our wholeinternal management structure with the largest emphasis on customer asset protection.
As a result, we were able to resume new account creation in July of last year. We sincerely
apologize to any and all customers and third parties who were inconvenienced by this.
Second, we expanded our virtual currency exchange services in the US and EU.
As the CEO of bitFlyer USA and chairman of bitFlyer EUROPE, I was focused onlaunching businesses in our foreign branches. Last year, they increased the number oflisted virtual currencies on Buy/Sell and launched bitFlyer Wallet, Japan’s number one
virtual currency app. To improve convenience, we introduced credit card payments inEurope and ACH payments in the US.
Using our status as the only virtual currency exchange licensed to operate in Japan, theUS, and the EU, we will accelerate our global program in 2020. Beyond the US and EU,
we will be expanding our services to other countries in Asia. We are concentrating onexpanding the virtual currencies listed on our exchange, improving the exchange’s
performance, UI/UX renovation, trading on global order books, new payment methods,
security tokens, and virtual currency derivatives.
The third and final foundation was the establishment of bitFlyer Blockchain, Inc.
Previously, bitFlyer, Inc. was both an exchange and blockchain company. In order tostreamline decision making and innovation as well as improve resource dedication, ourblockchain development division broke off into its own company. We continued to codevelop our real estate leasing contract platform as part of our partnership withSumitomo Corporation as well as other projects. As for the future, we will continue thecore development of our enterprise-use blockchain, miyabi, and our blockchain ID concept,bPassport. Our preparations for the upcoming blockchain revolution are continuing toadvance.
It looks like we were right to call 2019 the first year of the blockchain era. Beyond Libra,
news of blockchains could be heard regarding China’s CBDC (digital CNY) and otherconcepts. There was a significant increase in the number of blockchain businesses, andblockchains are ready to grow just as much as virtual currencies. I feel that Japan should
start getting serious about our national strategy on blockchains in order to not lose ourglobal competitive edge.
I established bitFlyer with a strong belief that blockchains will change the world. I thinkthat by handing off simple and redundant work to blockchains or AI, humanity will befree to use our time to pursue more creative work. Blockchains will also guarantee thereliability and rights of individuals, which will cause society to more appropriately
evaluate each individual’s efforts.
The bitFlyer Group’s mission has been to “Simplify the world with blockchain” ever since
our establishment. In order to achieve this, we will be unified as one team, one dream in2020 as we attempt to find ways to use technology to resolve global, societal issues andimprove the convenience of everyone’s lives.
The bitFlyer Group appreciates your continued support this year.
bitFlyer Group co-founder,
Yuzo Kano