Tech giant Yahoo is set to invest in cryptocurrency this year with plans to develop its own cryptocurrency exchange in a year’s time. Yahoo Japan has applied to purchase a 40% stake in BitARG, a cryptocurrency exchange that is registered in Japan under the Financial Services Agency (FSA).

Market realignment

Yahoo’s acquisition will lead to a major realignment in the crypto exchange industry in Japan. The acquisition will be made through YJFX, a wholly-owned subsidiary of Yahoo Japan headquartered in Tokyo that operates foreign exchange transaction services. The acquisition will cost YJFX $19 million (2 billion yen) and will be made up of outstanding shares in the firm as well as newly issued stock.

Yahoo Japan will not be stopping there, as it will rely on BitARG’s technology to develop its own cryptocurrency exchange that will go live early next year. Beginning in April, engineers, developers and executives from YJFX will be dispatched to BitARG where they will spend the rest of the year working with engineers from BitARG to develop a new exchange system. The two teams will also partner to work on internal controls, a corporate governance structure, and a customer management system.

A step ahead of Binance

The registration of BitARG by the FSA is highly significant as it enables it to operate in Japan, something that one of the biggest cryptocurrency exchanges in the world, Binance, has recently found itself battling to do. Binance recently confirmed having received a letter from the watchdog which requested that the exchange cease its operations in the lucrative Japanese market if it didn’t secure registration with the regulator.

The FSA has been conducting a major crackdown on most exchanges following the hacking of Coincheck, a major Japanese exchange, that saw the exchange lose $500 million and also exposed deeper security issues affecting most crypto exchanges.

Market consolidation

Market analysts have predicted that the number of cryptocurrency exchanges will decrease greatly in the coming years as people select the exchanges that they will stick to. The exchanges that last for the long haul will witness greatly increased trading volumes.

Major corporations have continued to express interest in this industry. This was witnessed when payments provider Circle acquired major crypto exchange Poloniex. The acquisition, which cost the Boston-based company $400 million, gave it a major foothold in the crypto exchange industry which is growing at an astounding rate. Yahoo Japan is seeking to tap into this market, and the acquisition of BitARG is definitely a great way to start.