US-based cryptocurrency exchange Kraken will reportedly shutter its trading services in Japan due to rising business costs.
Referencing an emailed statement from Kraken, Bloomberg is reporting that the San Francisco-based exchange operator is closing ‘all of its services’ in Japan with a tentative planned exit in June 2018. However, the exchange did leave the door open to a re-entry sometime in the future.
Kraken was quoted as saying:
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.
Kraken was not immediately available to respond to CCN’s request for comment at press time.
Kraken, one of the longest-running cryptocurrency exchanges in the world, has seen millions in investments from Japanese financiers including the venture capital arm of banking giant SBI, lead investor of a “multi-million” Series B round in early 2016. At the time, Kraken outlined its plans to use the financing to push cryptocurrency services, specifically bitcoin and Ethereum at the time, in Japan.
Kraken’s reported exit comes a time when the Financial Services Agency (FSA), Japan’s financial regulator, is increasing its scrutiny of domestic exchange operators – already operating or applying for a license – in the country. In March, the FSA issued a formal warning to Binance, now the world’s biggest cryptocurrency exchange, for operating in the country without registering and earning a license from the agency.
The ramped-up scrutiny follows the infamous theft of $530 million in NEM tokens from Tokyo-based exchange Coincheck, now seen as the biggest crypto exchange theft in history. The fallout from the January heist has seen a handful of exchanges hit with suspension orders from the regulator. The FSA has also taken the drastic step of issuing orders to shut down two cryptocurrency exchanges in late March. Elsewhere, SBI Virtual Currencies, the exchange operated by Japanese banking giant SBI, postponed its launch after determining it had to further strengthen its cybersecurity posture before launching services.
However, Japan remains among the friendliest jurisdictions for cryptocurrency businesses. Earlier this month, a government-backed working group proposed new guidelines intended to legalize and regulate initial coin offerings (ICOs) in the country.
Bitcoin’s recognition as a legal method of payment and the advent of cryptocurrencies in Japanese society has also seen major Japanese corporate giants foray into the crypto space. Earlier this month, Japanese online brokerage Monex announced its total acquisition of embattled exchange Coincheck despite opening itself to liabilities following the January theft. Last week, internet giant Yahoo Japan confirmed its intention to buy a 40% stake in Tokyo-based crypto exchange BitARG for anywhere between a reported 2 billion – 3 billion yen, between $18.5 million and $27.8 million.