Crypto player Kraken to exit Japan amid sector’s annus horribilis

US-based cryptocurrency exchange’s announcement comes amid plummeting asset values and sector-wide reckoning over FTX.

A representation of the virtual cryptocurrency Bitcoin.
US-based cryptocurrency exchange Kraken has announced it will cease operations in Japan [File: Edgar Su/Reuters]

United States-based cryptocurrency exchange Kraken has announced it will exit Japan, becoming the latest player to scale back operations after a horror year for digital assets.

Kraken will cease operations in the East Asian country by deregistering from the Financial Services Agency on January 31, the company said in a statement on Wednesday.

Kraken said customers should withdraw their fiat and crypto holdings before that date, with the exchange “fully funded to ensure all affected clients can withdraw their assets in a timely manner”.

“Current market conditions in Japan in combination with a weak crypto market globally mean the resources needed to further grow our business in Japan aren’t justified at this time. As a result, Kraken will no longer service clients in Japan through Payward Asia,” Kraken said.

“We value the trust our clients put in us and we will do what we can to minimise the impact of our decision for you. That’s why we are committed to ensure a seamless transition and we hope the information in this email will help you decide what is the best option for you.”

Kraken’s announcement comes days after it unveiled plans to lay off 1,100 employees, or nearly one-third of the total workforce, amid a sector-wide reckoning following the spectacular fall from grace of FTX and its founder Sam Bankman-Fried.

FTX’s bankruptcy and Bankman-Fried’s subsequent arrest on multiple charges of fraud sent shockwaves through the industry, prompting calls for tighter regulation and predictions of long-term decline for the sector.

Crypto prices have plummeted in 2022, with flagship asset Bitcoin losing nearly two-thirds of its value since the start of the year.

Kraken, operating through its subsidiary Payward Asia, previously ceased operations in Japan in 2018, citing the rising cost of doing business in the country, before relaunching with a Tokyo office two years later.

Source: Al Jazeera and news agencies