The San Francisco-based exchange Kraken is ceasing its trading services for Japanese residents in the near future. The customers of the exchange were sent an email, telling them that Kraken plans to focus on improving services in other countries and that a return to Japan is still on the cards further down the road. Head of Kraken operations in Japan, Ryushi Watanabe has declined to comment on the matter.
The official statement blames the rising operational costs in Japan for the closure. Notably, Kraken is currently not among crypto exchanges, registered with Financial Services Agency (FSA), Japanese financial regulator, which could have also been a significant factor for the closure. Ranked 11th globally in 24-hour trading volume at press time by CoinMarketCap, Kraken will finalize its Japanese exit at the end of June.
According to the report published by Bloomberg, Kraken stated that, “Suspending services for Japan residents will allow us to better focus on our resources to improve in other geographical areas. 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.“
Members of the crypto sphere often consider Japan to be one of the main crypto-friendly hubs, with many companies adopting cryptocurrencies and blockchain technology. Along with organizations, the public is also involved as, according to a recent survey, 14% of Japanese males aged 25-30 own some sort of digital currency.
However, crypto traders and owners now have to face ever-tightening regulations, which have become significantly stricter after the Coincheck hack, which resulted in an unprecedented loss of NEM coins, worth around $534m. Following the heist, FSA began on-site inspections of unregistered crypto exchanges in Japan. As a result, three exchanges had to temporarily suspend operations, while eight more have been handed business improvement notices.
The world’s largest crypto exchange by 24-hour volume, Binance, opened a branch in Malta after receiving a FSA notice for not being registered, while a two other exchanges decided it was better to shut down than work with regulators for compliance. FSA still aims to make the crypto markets thrive in Japan and is said to be devising a legal framework for ICOs.
Nonetheless, it seems that digital currencies are going mainstream in Japan with country’s financial giants such as Monex and SBI looking to set up their own exchanges. Monex has already announced it completed the acquisition of the beleaguered Coincheck exchange for approximately $34m. The acceptance of digital currencies is also helping the yen to dominate the global bitcoin trade. According to Coinhills, the yen accounted for almost 70% of total bitcoin volume, while the dollar made up for only 20%.
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I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.