By Michael Scott
US-based Kraken announced pulling out of the Japanese market as part of the crypto exchange restructuring efforts. The crypto exchange indicated strained resources necessitated the second exit from Japan that portrayed weak crypto market performance.
Second Pullout from Japan
The announcement by Kraken on December 28 confirmed that the crypto exchange giant is set to cease operations and deregister from the country’s Financial Services Agency (FSA) by January 31, 2023. Kraken identified the need to prioritize resources in high-yield markets. It regretted the continued investments as untenable amidst the slow market growth in Japan, worsened by the global crypto market slowdown. Kraken will discontinue serving its Japanese clients via Payward Asia Inc.
Kraken runs Japan’s operations via its wholly owned subsidiary – Payward Asia Inc, as it did in 2014 before exiting in April 2018. The crypto exchange’s reason for the second pullout mirrored the initial instance when it suggested pursuing global investment in high-growth geographical areas.
Kraken would reenter the Japanese market in October 2020 by relaunching the Tokyo-based Payward Asia. Before expanding to others, the subsidiary offered spot trading services for the primary cryptos.
Kraken Utilizes Phased Exit from Japan
The announcement confirming the end of the second stint failed to suggest Kraken’s plan for a market hosted within the world’s third-largest economy by nominal GDP. Nevertheless, Kraken gave its clients a period lapsing by January 31 to access funds from the PayWard Asia exchange.
Kraken directed the users to consider transferring their crypto holdings into externally-supported wallets. It noted that clients could convert the crypto portfolio into the Japanese yen to facilitate its transfer to the preferred bank account.
Kraken scheduled the lifting of withdrawal limits in January. Nonetheless, it revealed that users who staked Ether would retrieve their digital wealth using a process Kraken will disclose later. Although trading functions will exist till its deregistration, Kraken confirmed disabling deposits on January 9.
Cost Cutting Measures
The decision to cease operating in Japan aligns with Kraken’s recent efforts to cut costs. Kraken declared a 30% reduction in its headcount, translating to 1100 employees, citing harsh crypto market conditions.
The November 30 announcement regretted the declining trading volumes, and user sign-ups necessitated lowering expenditure.
Similarly, Kraken admitted that pulling out from Japan is necessary to ensure the overall business is sustainable, particularly in allocating investment to high-yield zones.
Editorial credit: salarko / Shutterstock.com