DEFINITION of Coincheck

Coincheck is a cryptocurrency exchange and digital wallet company based in Japan. Coincheck was one of the largest exchanges in Asia in 2017.

BREAKING DOWN Coincheck

Coincheck is a Tokyo-based cryptocurrency exchange and digital wallet founded in 2014. In 2017, it was the largest cryptocurrency exchange in Asia by volume.

While bitcoins have long been the most-traded cryptocurrency on the exchange, customers can also buy, sell, and trade Ethereum and other tokens. A professional version of its exchange platform, Coincheck Tradeview, shares similarities with platforms used to trade fiat currencies, such as the dollar.

Japan has been far more open to the use and development of cryptocurrencies than many other countries, going so far as to allow bitcoin to be used as legal tender. Its soft approach to regulation has resulted in some digital asset companies shifting their operations from other Asian countries, such as China and South Korea, that have taken a firmer stance.

The popularity of cryptocurrencies in Japan may also be related to a lack of high-return investment options, since low growth and low inflation have plagued the economy since the 1990s.

The Coincheck exchange matches the bids and offers of customers, with the settled price representing the lowest price the seller is willing to accept and the highest that a buyer is willing to pay. Customers can deposit fiat currency in order to conduct transactions.

Coincheck does not charge a transaction fee, but does charge fees for deposits and withdrawals. The fee amount depends on the currency that transfers, withdrawals, and payments are being made in. Fees are also levied on executed swap orders. Fees for transferring cryptocurrencies are denominated in the token that is being transferred, with bitcoin fees denominated in bitcoin.

In addition to offering exchange services, Coincheck also operates Coincheck Payment. This service allows businesses to accept payments in bitcoins. For e-commerce websites, Coincheck Payment uses an API to handle transactions. Retailers can also use Coincheck Payment by downloading an app. Businesses must create an account, complete SMS authentication, submit identification documents, and download the app.

Coincheck made headlines in January 2018, when hackers were able to transfer $500 million worth of NEM, a cryptocurrency, out of their digital wallets. These wallets were “hot wallets,” meaning they were connected to the Internet, rather than “cold wallets,” which allow offline storage of a cryptocurrency.

When Coincheck executives announced that the theft had occurred, the news sent cryptocurrency prices tumbling. The company indicated that it would reimburse its customers for their losses.

The theft was the largest since Mt. Gox in 2014, when hackers stole an estimated $480 million in digital currencies, and has led to Japan’s Financial Services Agency (FSA) to launch an investigation. At the time of the theft, Coincheck did not have a license from the FSA. The regulator had approved the registration of 16 cryptocurrency exchanges as of January 2017.

The news of the theft, coupled with other high profile hacks of other exchanges, led several governments to weigh in on cryptocurrencies. South Korea indicated that it was considering banning crypto exchanges, while China has indicated that it would ban exchanges entirely. In the United States, the Treasury Department indicated that it considered cryptocurrencies a threat, even as some U.S. regulators were seeking to formalize the rules for initial coin offerings (ICOs) and cryptocurrency futures.