Kraken leaves Japan as Binance cements its dominant position
San Francisco-based cryptocurrency exchange Kraken is halting its trading services for Japanese residents, nearly two years after it re-entered the lucrative market when regulators stepped up oversight in the country.
Kraken has decided to cease its operations in Japan and deregister from the Financial Services Agency (JFSA) as of January 31, 2023. Explaining the rationale behind its second exit, the company cited current market conditions in Japan in combination with a weak crypto market globally. As such, the resources needed to further grow their business in the country aren’t justified at this time, the company wrote in a blog post.
Kraken’s Japanese clients have until January 31, 2023 to withdraw their fiat and crypto holdings. They can also withdraw their balances to an external wallet or liquidate the portfolio and withdraw the value in fiat to a domestic bank account.
“On January 9, deposit functionality will be removed from your account. Trading functionality will remain so that you can convert your balance to the asset of your choice. In addition, withdrawal limits have been removed for the month of January to ensure you can remove your assets from Kraken. Funds currently staked with Kraken can be unstaked and transferred or converted as desired. Kraken will soon be distributing additional info regarding the ETH unstaking process shortly. Any remaining non-JPY fiat (e.g. USD, EUR) and crypto holdings held on Kraken after February 1 00:00 JST will be automatically converted to JPY and Kraken’s Instant Buy fee will be applied,” the statement further explains.
The Japanese subsidiary of Kraken, Payward Asia, was awarded a license to trade as a crypto-asset exchange operator under the Payment Services Act. In addition, the firm has secured its membership of the Japan Virtual Currency Exchange Association (JVCEA), the self-regulatory organization that has the mandate to oversee the industry.
Kraken was among the few platforms permitted to offer crypto services without a license in Japan while it sought to meet the rules that established Bitcoin as a legitimate payment method. However, the exchange withdrew its services in 2018 due to rising costs of maintaining its business there, but indicated at the time it could return in the future.
The move occurred after Tokyo regulators became more cautious and tightened its grip in the wake of a cryptocurrency heist that saw nearly $540 million worth of customer crypto assets lost at Coincheck.
Kraken’s exit comes shortly after rival Binance acquired Japanese-registered crypto exchange service provider Sakura Exchange BitCoin (SEBC). The financial terms of the transaction were not disclosed.
SEBC is among a total of thirty one crypto exchanges registered in the country with the Financial Services Agency (FSA).
Binance pulled out of Japan in 2018 after the country’s financial regulator warned that the crypto giant is operating in Japan without permission. At the time, CEO Changpeng Zhao spoke out against rumors that Binance was subject to criminal charges by the FSA. He also claimed that the exchange was in “constructive dialogues” with the regulator over the matter.