Kraken, a popular cryptocurrency exchange, is planning to pull out of Japan. The company has recently announced that it is temporarily ceasing operations in Japan to focus on other regions. However, it is also said that it may re-open in Japan at a later point in time. The statement in an email pointed the closure is due to the rising costs of running a business in Japan.
Costs and Focus
“Suspending services for Japan residents will allow us to better focus on our resources to improve in other geographical areas,” the company said in the statement. “This is a localized suspension of service that only affects residents of Japan and does not impact services for Japanese citizens or businesses domiciled outside of Japan.”
Kraken Facing Regulatory Pressures
According to the speculators, Kraken’s decision is due to the regulatory pressures. Japanese Financial Services Agency (FSA) is strictly enforcing licensing policies to run & operate crypto exchanges in the country. These regulations, that were first brought to the fore in the aftermath of the Mt Gox debacle, became stricter in the wake of the $500million Coincheck hack.
Japanese Regulation
As per the Coinmarketcap, Kraken’s volume was the 10th largest in a global list of cryptocurrency exchanges. Reportedly, the exchange was trading without a license and the FSA is conducting a stringent inspection on unlicensed exchanges. Despite the $500 million USD hack earlier this year, legal operators in Japan are welcoming new trading That have a license and operates under the guidance of the country’s regulators.
Cryptocurrency and ICO regulations have long been in the news. Japan, instead of banning crypto-related services as China and South Korea did, legalized Initial Coin Offerings. As reported, in March, Binance, one of the largest cryptocurrency exchanges, was also flagged by regulators and in fact, few other cryptocurrency exchanges such as Mr. Exchange, Tokyo Gateway have closed operations in the country.
Value of the Japanese Market
As per the reports, Yo Sub Kwon, Coinsetter’s founder said the regulatory response is “an overdue reaction”. Kraken bought Coinsetter in 2016. Kwon added that “they are going to pull out temporarily and go back to the FSA when they are ready to register with them.” Japan was amongst the top nations for cryptocurrency traders and enthusiasts. As such, it was the first country announcing Bitcoin as a legal tender. According to Nikkei reports, a noted global financial strategist at Deutsche Bank pointed that 40% of Bitcoin trading was conducted in Yen (Japan’s national currency) between the months of October and November 2017.
