In a filing to the secondary board of the Hong Kong bourse this month, the company said Madison Lab, a subsidiary, is to acquire 67.2 per cent of BitOcean from independent third parties for 1.68 billion yen (US$15.12 million), plus about another US$15 million in various fees. The platform is one of 16 operators currently registered with Japan’s Financial Services Agency, but has not started trading yet.
Interestingly, HDR Cadenza Management, which is a part of the HDR Global Trading that owns the Hong Kong-based crypto exchange BitMEX, is also planning to buy a 51%stake in Madison Labs.
The Chairman at Madison Holdings, Raymond Ting Pang-wan, has stated that Madison Labs’ partnership with BitOcean will help the company diversify. Pang-wan also added that Madison Labs will be able to develop its digital currency exchange through its deal with BitMEX.
In an interview, Pang-wan elaborated on why Madison Labs is diversifying into financial tech domain saying:
“Our wine business is stable and profitable, but then it is small. It is hard to make wine trading into a very big business. This is why we have to diversify into financial technology and the cryptocurrency business – to achieve a better return for our shareholders. Virtual currencies and blockchain are getting more popular. Investing in the virtual currency sector will expand our income source.”
But the deal comes at a time when the price of bitcoin has slumped, from a high of US$20,000 last December to about US$3,000 now. Ting, however, said it was the right time to enter the business.
“Bitcoin is cheap, which has created a good opportunity for us to enter the market. We are eyeing the long term, so we are not worried about short-term volatility.”
As previously reported, Japan has both a self-regulatory body, the Virtual Currency Exchange Association (JVCEA), and a thoroughgoing procedure for crypto exchange operators to acquire a license from the FSA. The organization has exercised intensified oversight of the sector since this January’s industry record-breaking $532 million hack of domestic trading platform Coincheck.
While a license has been mandatory for all crypto exchanges operating within Japan since the amendment of the country’s Payment Services Act back in April 2017, the FSA continued to ratchet up requirements for applicants throughout 2018; as many as 200 operators are reported to currently be awaiting a license.
Just for a reminder, we already wrote of how now you can buy your wine with crypto.
Even though the days of buying wine with a single coin are long gone, it seems that cryptocurrency could change that.