In this article
Kraken is one of the world's largest crypto exchanges.
Tiffany Hagler-Geard | Bloomberg via Getty Images
Digital currency exchange Kraken will close down its operations in Japan next month, in another sign of consolidation in the battered crypto industry.
In a blogpost on Wednesday, Kraken said it would cease crypto trading services through its Japanese subsidiary, Payward Asia, and deregister from Japan's Financial Services Agency on Jan. 31, 2023.
It is the second time Kraken has left the Japanese market. The first was in 2018, when it closed four years after initially establishing operations in 2014. It relaunched in the country in 2020 after securing registration from the regulator.
Kraken said the move was "part of Kraken's efforts to prioritize resources and investments in those areas that align with our strategy and will best position Kraken for long term success."
It cited a combination of "current market conditions in Japan" and a "weak crypto market globally" as the reasons behind its decision.
watch now
VIDEO9:5609:56
FTX's collapse is shaking crypto to its core. The pain may not be over
Japanese customers will have until Jan. 31 to withdraw their fiat and crypto holdings from the Kraken platform, the company said. They'll have the option to either withdraw their crypto to an external wallet or cash out and transfer Japanese yen to a domestic bank account.
From Jan. 9, users in Japan will no longer be able to deposit funds into their account, though trading functionality will remain in place so that they can convert their balance to the asset of their choice.
Kraken is one of the world's largest crypto exchanges, processing $408.9 million of trading volumes per day, according to CoinMarketCap data.
Along with numerous other major industry players, it has been deep in cost-cutting mode lately. On Nov. 30, the firm slashed 1,100 jobs, or 30% of its workforce, a move it said was needed to "adapt to current market conditions."
Crypto has been plagued by all manner of scandals this year, which has been termed the industry's "annus horribilis."
The pain started with the demise of Terra, a once $60 billion stablecoin operator, and was followed by the toppling of several other dominos with exposure to the project, including the crypto lender Celsius and hedge fund Three Arrows Capital.
Crypto exchange FTX's slide into bankruptcy is the most notable industry failure so far. Its controversial co-founder and former CEO Sam Bankman-Fried has been released on bail while awaiting trial for fraud and other criminal charges.
Prices of bitcoin and other digital currencies have slid as investors soured on the market and as climbing interest rates have put downward pressure on speculative assets such as tech stocks. Bitcoin, the world's biggest token, is down over 60% so far this year.
I'm an enthusiast with a deep understanding of cryptocurrency markets and exchanges. My knowledge is derived from extensive research, staying updated with the latest industry trends, and a comprehensive understanding of blockchain technology. I've followed the evolution of major crypto exchanges and their impact on the global market. Let's delve into the concepts mentioned in the article:
-
Kraken as a Crypto Exchange:
- Kraken is identified as one of the world's largest cryptocurrency exchanges.
- It operates globally and has a significant presence in various markets.
-
Kraken's Operation in Japan:
- Kraken will close down its operations in Japan by the end of January 2023.
- This marks the second time Kraken has exited the Japanese market, with the first instance occurring in 2018.
-
Closure Reasons:
- Kraken attributes the decision to cease operations in Japan to a combination of "current market conditions in Japan" and a "weak crypto market globally."
- The move is framed as part of Kraken's strategy to prioritize resources and investments in areas aligned with long-term success.
-
Withdrawal Process for Japanese Customers:
- Japanese customers have until January 31, 2023, to withdraw their fiat and crypto holdings from the Kraken platform.
- Withdrawal options include transferring crypto to an external wallet or converting assets to Japanese yen and transferring to a domestic bank account.
-
Trading Functionality and Deposit Restrictions:
- From January 9, 2023, users in Japan will no longer be able to deposit funds into their Kraken accounts.
- However, trading functionality will remain in place to allow users to convert their existing balances to the asset of their choice.
-
Kraken's Global Standing:
- Kraken is highlighted as one of the world's largest crypto exchanges, processing $408.9 million of trading volumes per day, according to CoinMarketCap data.
-
Industry-Wide Cost-Cutting and Challenges:
- Kraken, like other major industry players, has been engaged in cost-cutting measures, including job cuts.
- The cryptocurrency industry is described as facing challenges, with references to a weak global crypto market and a need for companies to adapt to current market conditions.
-
Challenges in the Cryptocurrency Industry:
- The article touches on the challenges faced by the crypto industry in the referred year, mentioning scandals and notable failures like the collapse of FTX.
- Various events, including the demise of Terra and issues with prominent entities like Celsius and Three Arrows Capital, are highlighted.
-
Market Performance and Bitcoin's Decline:
- The article provides context to the broader market conditions, noting a significant decline in the prices of bitcoin and other digital currencies.
- Investor sentiment is cited as a factor, with a more negative outlook on the market, compounded by rising interest rates affecting speculative assets.
In summary, Kraken's decision to exit the Japanese market is situated within a broader context of challenges faced by the cryptocurrency industry, including market conditions, regulatory considerations, and global economic factors.
