Checking in with Coincheck

Monex Group reported second quarter results, including cryptocurrency exchange Coincheck, last week. First half consolidated pre-tax profits for the fiscal year ending March 21 were up by 89% to JPY 4.2bn, with all segments seeing strong results for a group that is pivoting from brokerage to an asset management business.

Second quarter consolidated pre-tax profits of JPY 2.2bn saw the crypto asset segment leading with JPY 0.7bn, a sevenfold increase quarter-on-quarter, and the best result since Monex Group acquired Coincheck. Two main factors become apparent in the earnings presentation: efficiency gains through an office closure and insourcing of operations, leading to savings of around JPY 300m, and significantly higher altcoin (rather than bitcoin) trading volumes.

Coincheck claims #1 position among exchanges based on app downloads during the first half of the year. Of its 2.15m registered users, just under half have actually confirmed their identification, which would imply that withdrawals are limited to this population, and therefore should be seen as active users (there might be a smaller percentage of those not fully ID’ed who are actively trading, but would not be able to withdraw).

Additional services presented here include a software service for virtual shareholder meetings, the plan for Initial Exchange Offerings (IEOs) by the end of the fiscal year in line with regulations that came into effect in Japan in May 2020, as well as the establishment of a marketplace for Non-Fungible Tokens (NFTs) primarily used by gaming companies (e.g., a virtual sword), which fall outside of current regulations in Japan.

Coincheck notes that while the transaction value for Bitcoin in Japan has decreased by 14% from April to September, compared to the same period in 2019, Bitcoin transaction value at Coincheck has held steady, and the exchange as outperformed in altcoin trading, where it claims the #1 spot in Japan with 14 listed coins.

Additional blockchain use cases are under development, with the objective to drive synergies across the group and its external ecosystem.

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