Kraken Withdraws from Japan Again: Crypto Exchange Cites Weak Market Conditions

In a surprising turn of events, cryptocurrency exchange giant Kraken has announced its departure from the Japanese market for the second time. Citing challenging market conditions and a need to strategically allocate resources, Kraken will officially cease operations in Japan by January 31, 2023. This move raises questions about the state of the crypto market in Japan and the broader global landscape. Let’s delve into the details of this significant development and understand what it means for crypto users and the industry.

Why is Kraken Leaving Japan (Again)?

Kraken’s decision to deregister as a crypto asset exchange operator with Japan’s Financial Services Agency (FSA) wasn’t entirely out of the blue, but it certainly caught many by surprise. The official announcement, made via a blog post on December 28th, points to a confluence of factors, primarily centered around the current economic climate in the crypto sphere.

Here’s a breakdown of the key reasons Kraken cited for its withdrawal:

• Weak Crypto Market in Japan: Kraken explicitly stated that “current market conditions in Japan” are a significant factor. This suggests a potentially lower trading volume, reduced user activity, or increased regulatory hurdles making operations less profitable in the region.
• Weak Global Crypto Market: The broader global crypto market downturn is also playing a crucial role. The industry has been facing headwinds, including price corrections, regulatory scrutiny, and economic uncertainties. This global weakness impacts all exchanges, including Kraken.
• Prioritizing Resources: In times of market contraction, businesses often need to make tough choices about resource allocation. Kraken’s statement about needing to “prioritize resources” and investments indicates a strategic shift. Focusing on more profitable or strategically important markets could be a necessary step for long-term sustainability.

It’s also worth noting that this isn’t Kraken’s first foray into and exit from Japan. Let’s take a quick look at their history in the country.

A Brief History: Kraken’s On-Again, Off-Again Relationship with Japan

Kraken’s journey in Japan has been somewhat of a rollercoaster. Here’s a timeline to put things in perspective:

• 2014: First Entry – Kraken initially launched operations in Japan through its subsidiary, Payward Asia Inc.
• 2014 – 2018: Initial Operations – Payward Asia operated in Japan for approximately four years, offering crypto exchange services.
• April 2018: First Withdrawal – Kraken made its first exit from Japan, citing a need to “better focus its resources on growth in other geographical areas.” This mirrors the current reasoning, highlighting a recurring theme of resource prioritization.
• October 2020: Relaunch – After a hiatus of over two years, Kraken decided to re-enter the Japanese market. They relaunched with a headquarters in Tokyo and initially offered spot trading for five major cryptocurrencies, with plans for expansion.
• December 2022/January 2023: Second Exit – Just over two years after relaunching, Kraken announces its second withdrawal from Japan, effective January 31, 2023.

This repeated cycle of entry and exit underscores the challenges and complexities of operating a crypto exchange in the Japanese market, particularly under fluctuating global economic conditions.

What Does This Mean for Kraken’s Users in Japan?

For Kraken users in Japan, the immediate concern is accessing and withdrawing their funds. Kraken has provided a clear timeline and process for this:

• Withdrawals Open Until January 31, 2023: Japanese clients can withdraw their cryptocurrency or Japanese Yen until this date. This is a crucial deadline for users to take action.
• Withdrawal Options:
  • Cryptocurrency Withdrawal: Users can transfer their crypto holdings to an external wallet of their choice.
  • Japanese Yen Withdrawal: Users can convert their crypto portfolio to Japanese Yen and then transfer it to a domestic Japanese bank account.
• Withdrawal Limits Removed in January: To facilitate smooth withdrawals, Kraken will remove withdrawal limits in January, providing greater flexibility for users.
• Staked Ether (ETH): Kraken has assured users that a process for retrieving staked Ether will be announced shortly. This is important for users who have their ETH locked in staking contracts.
• Deposits Disabled on January 9, 2023: As of January 9th, deposits to Kraken’s Japan platform will be disabled. Users should refrain from making any new deposits after this date.
• Trading Functions Remain Operational (For Now): While deposits are ceasing, trading functions will remain operational for a period. However, users should anticipate the eventual complete shutdown of trading as well, likely by January 31st.

Actionable Insight for Kraken Japan Users: If you are a Kraken user in Japan, it’s imperative to log into your account and plan your withdrawals immediately. Familiarize yourself with the withdrawal options and ensure you complete the process before the January 31st deadline.

Kraken’s Cost-Cutting Measures: A Sign of the Times?

Kraken’s exit from Japan isn’t an isolated event. It comes on the heels of a significant workforce reduction announced in November 2022. The exchange revealed it was reducing its global headcount by approximately 1,100 employees, representing about 30% of its workforce. This drastic measure was also attributed to “difficult market conditions.”

This combination of factors – exiting markets and reducing staff – points to a broader trend within the crypto industry. Exchanges and crypto companies are facing increased pressure to streamline operations, cut costs, and navigate a challenging economic landscape. Kraken is not alone in taking such steps, and we may see similar announcements from other players in the crypto space as the market continues to evolve.

Conclusion: Navigating the Evolving Crypto Landscape

Kraken’s second departure from Japan underscores the volatility and unpredictability of the cryptocurrency market. While Japan remains a significant market with a strong interest in crypto assets, current economic headwinds and strategic business decisions have led Kraken to re-evaluate its presence. For users in Japan, the immediate focus should be on securely withdrawing their funds within the given timeframe. For the broader crypto industry, this event serves as a reminder of the need for adaptability, resilience, and strategic resource management in a rapidly changing global market. As the crypto landscape continues to mature, we can expect to see further shifts and adjustments from exchanges and other industry participants as they navigate the evolving regulatory and economic environment.