Japan’s cryptocurrency exchanges face shortage of engineers

TOKYO: When cryptocurrency exchange Coincheck Inc explained how hackers made off with US$530 million in digital money, it said part of the problem was beyond its control: Japan’s lack of software engineers.

Coincheck said that no matter how hard it tried, it simply couldn’t hire workers with the skills to seal gaps in security.

“We were aware we didn’t have enough people working on internal checks, management and system risk,” chief executive Koichiro Wada told reporters last month. “We strived to expand using headhunters and agencies, but ended up in this situation.”

Coincheck isn’t alone. Companies across Japan’s booming cryptocurrency industry are scrambling to hire engineers, including cybersecurity experts and specialists in blockchain, the computer code that underpins bitcoin.

Financial regulators are pressing exchanges to tighten security after the Coincheck heist even as a host of companies try to enter the booming market.

The resulting shortage risks blunting Japanese exchanges’ competitive edge as the country’s cryptocurrency industry matures, experts say.

And it could leave the industry exposed to more thefts.

“It could put the brakes on everything,” said Alexander Jenner, a headhunter at Computer Futures in Tokyo. “The sector’s growing so quickly, and the better exchanges are surviving. But many of them will fail.”

There are 32 exchanges operating in Japan. About 100 other companies have approached the watchdog that oversees the sector about applying for a licence, a senior Financial Services Agency official told Reuters.

Demand is particularly high for engineers with skills that could help growth, from designing userfriendly interfaces to writing code that helps withdrawals of digital coins, as well as the security expertise needed to better protect consumers.

“The FSA is breathing down necks on security, compliance and risk,” said Mike Kayamori, chief executive of cryptocurrency exchange Quoine. “And if you don’t hire, you won’t be able to survive.”

Japan doesn’t compile data on blockchain or software engineers. In 2016, though, there was a shortfall of more than 15,000 workers in big data and artificial intelligence, which rely on software engineers, according to the Ministry of Economy, Trade and Industry.

That number will rise to 50,000 by 2020, the ministry projects.

Headhunters specialising in cryptocurrency and blockchain say the supply of labour can’t keep up with demand. — Reuters