Liquid Crypto Exchange Attains Japanese Derivatives License

Liquid, a Japanese cryptocurrency exchange, has confirmed that its subsidiary company, Quoine Corporation, has purchased a Type I Financial Instruments Business license under the Financial Instruments and Exchange Act from the Japanese regulatory bodies.

The exchange filed the application to Japan’s financial regulatory body in Q2 2020. This approval will enable Liquid to launch derivatives trading on its platform, providing investment opportunities to both institutional and retail clients, although a particular date for launch was not disclosed.

Launched in 2014, Liquid is one of the biggest crypto-fiat exchanges in the world with over 800,000 clients and a reported biggest daily trade volume of $1.1 billion across 2021. The platform operates entirely under Japan’s Payment Services Act via Quoine Corporation and has also applied for a license with the Monetary Authority of Singapore (MAS).

Seth Melamed, Liquid’s chief operating officer, shared his opinions on the importance of achieving regulation within the industry:

“The Type 1 license issuance is the culmination of a great deal of preparation and collaboration by the entire Liquid team. It is also a validation that trading derivatives in crypto can be done in a compliant manner with full customer protections & transparency.”

 

Liquid Wallet Hacks

In mid-August 2021, Liquid was the victim of a $97 million security hack on all its hot wallets, even though the firm was quick to insist that users’ wallet balances were not impacted by the incident.

Hot wallets like Phantom and Metamask are a strategy of storing and trading cryptos mainly considered more susceptible to hacks than the offline alternative cold wallets. In the weeks after the targeted attack, the exchange unveiled positive news of a $120 million debt financing investment from FTX Trading, a subsidiary of FTX.

This financing was done in a bid to enhance the exchange’s balance sheet, support licensing efforts in jurisdictions of Singapore and Japan, increase capital and liquidity generation, and customer support services.