Citi Alumni Drive Japan Crypto Firm BitFlyer’s U.S. Push

(Bloomberg) -- Rising institutional demand for cryptocurrencies is prompting Japanese digital assets exchange bitFlyer Inc. to expand in the U.S. as it seeks to more than double its target for the proportion of revenue it makes overseas.

“The U.S. market is going through a transformation,” President Kuniyoshi Hayashi, a former deputy president at Citigroup Inc.’s Japanese brokerage unit who joined the firm in March, said in an interview. “Naturally, we have to have a try.”

The seven-year-old Tokyo-based startup aims to lift the weight of foreign sales to 20% of total revenue over the coming two years, Hayashi said. The firm’s sales overall rose 41% last year to 7.6 billion yen ($69 million), according to its website. The company’s main non-Japanese institutional clients have so far been family offices and hedge funds, he said.

Having first established a presence in the U.S. in 2017, the firm recently created a sales-and-trading team partly to tap new clients, he said. Takaaki Kato, former head of equity markets within Citigroup Global Markets Japan who also joined bitFlyer recently, will lead the division.

As well as the recent hires, the company plans to add about 20 people or more -- such as engineers and legal experts -- by the end of the year, Hayashi said.

Developments in the derivatives market and new investment products have made it easier to access digital assets and once-skeptical Wall Street banks are stepping up efforts to allow their customers to trade them. In Japan, however, institutional investors are further behind, partly because few firms provide the custodial services required for crypto assets, said Masamichi Matsushima, Monex Inc.’s crypto assets analyst.

While U.S. banking titans have more resources and larger customer bases, bitFlyer can appeal to U.S. investors as a reliable exchange to use during Asian trading hours, as cryptocurrencies trade round the clock, Hayashi said.

The amount of cash and crypto assets held at bitFlyer’s client accounts could grow beyond 1 trillion yen by the end of the year from 573.2 billion yen in March, Hayashi said.

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