Following global layoffs, cryptocurrency exchange Kraken will close its Japan operations
Next month, digital currency exchange Kraken will cease operations in Japan, marking yet another symptom of market concentration. On Wednesday, Kraken announced that on January 31, 2023, it would stop offering cryptocurrency trading services through its subsidiary in Japan, Payward Asia, and deregister from the Financial Services Agency of Japan. This is Kraken’s second exit from the Japanese market. The first was in 2018, four years after it started operating when it shut down. In 2020, it reopened in the nation after obtaining regulator registration. As part of its efforts to focus resources and investments in areas that are consistent with its vision and will best position it for long-term success, Kraken said the action was taken. It gave as justifications for its choice a mix of “current market conditions in Japan” and a “poor crypto market globally.”
In 2011, the United States-based bitcoin exchange and bank Kraken were established. One of the first bitcoin exchanges to be listed on Bloomberg Terminal, its estimated worth as of mid-summer 2022 was $10.8 billion USD. Kraken generated US$1.1 billion in revenue as of 2020. Jesse Powell, a graduate of California State University, Sacramento, and Thanh Luu co-founded Kraken in 2011. Powell worked as a consultant for Mt. Gox to resolve a security issue and started developing Kraken as a substitute in anticipation of Gox’s demise; Gox would in fact fail security audits and fall in 2014. When Kraken was first introduced in September 2013, it only supported trading in Bitcoin, Litecoin, and euros. Later, it included margin trading and other currencies. In order to create the industry’s self-regulatory body, the “Committee for the Establishment of the Digital Asset Transfer Authority,” Kraken had already teamed up with other US Bitcoin participants.
According to the business, Japanese customers have until January 31 to withdraw their fiat and cryptocurrency assets from the Kraken platform. They will have the choice of cashing out and transferring Japanese yen to a local bank account or withdrawing their cryptocurrency to an external wallet. Users in Japan won’t be able to deposit money into their accounts starting on January 9, but trading capability will still be available so they can exchange their balance for the asset of their choice. According to data from CoinMarketCap, Kraken is one of the biggest cryptocurrency exchanges in the world, processing $408.9 million in daily trading activity.
It has recently been heavily engaged in cost-cutting mode, along with many other significant industry participants. The company cut 1,100 employees on Nov. 30, or 30% of its personnel, claiming that this was necessary to “adjust to current market realities. This year has been dubbed the industry’s “annus horribilis” because of the numerous controversies that have afflicted the cryptocurrency space. The suffering began with Terra’s failure, a once $60 billion stablecoin operator, and continued with the collapse of numerous other companies with exposure to the project, including the cryptocurrency lender Celsius and hedge fund Three Arrows Capital. The most famous industry failure to date is the demise of the cryptocurrency exchange FTX. Sam Bankman-Fried, a contentious co-founder and former CEO, was freed on bond while he awaited trial on fraud and other allegations. As investors lost faith in the market and as rising interest rates put downward pressure on speculative assets like tech stocks, the price of bitcoin and other digital currencies has fallen. The largest token in the world, Bitcoin, has decreased by more than 60% this year.