In April, Kraken, a San Francisco-based exchange, announced that it would stop
offering its services to residents of Japan. The exchange will stop accepting deposits from the country, one of the largest markets for digital coin trade, around the middle of this month. Trade for existing customers in Japan will be suspended in mid-June, and these customers must withdraw their funds by the end of this month
Kraken entered the market in October 2014. Last month it said:
“IIT is impractical to continue service for Japan residents”
The decision to leave was due to “careful consideration of revenue against the costs and resources required to maintain service,” said Kraken.
The 13th largest stock exchange in the world did not go into details about why it is leaving Japan, but revenue does not seem to be a problem. The bitcoin’s price now fluctuates around 9,000 dollars, which is less than half of the historical maximum reached in December. But the daily trading volume in bitcoin, which is essential for the exchange, has not received a corresponding decline.
The market suspects that the costs associated with compliance with the new rules in Japan are the main reason for the departure of Kraken.
Cryptocurrency exchanges under the strict supervision in Japan
The Japanese cryptocurrency community experienced a shock in January, when Coincheck suffered a record hack, losing NEM coins at $ 530 million. April 16 Monex Group, bought Coincheck for 33 million dollars. Later in April, Coincheck announced that for the fiscal year to March operating income was $ 491 million. And that’s allowing the fact that it compensated users 47.3 billion yen ($ 432 million) for hacking NEM.
As Japanese regulators began to seriously embark on this industry, commercial cryptocurrency exchanges in the country launched a self-regulatory body to restore the confidence of traders.
Although Coincheck’s profit shows that the exchange of cryptocurrencies can be highly profitable,
THE COSTS OF LAUNCHING THEM IN JAPAN ARE ONEROUS
“Suspending services for Japan residents will allow us to better focus on our resources to improve in other geographical areas. After we have had a chance to better catch to our rapid growth, we will consider the possibility of resuming service for Japan residents,” Kraken said.
Hong Kong’s cryptocurrency news is even more shocking. Binance, the world’s largest cryptocurrency exchange, leaves Asia to meet friendly Malta, a country in the Mediterranean Sea.
China began to more strictly regulate the trade in cryptocurrencies in 2017, when some exchanges were forced to close. The Securities and Futures Commission of Hong Kong also issued warning letters to the exchanges for work without approval. Binance is considered one of seven who received a warning from the Japanese financial services agency.
Malta offers Binance Harbor, where it can develop its business with less uncertainty of regulation. The Prime Minister of Malta, Joseph Muscat, welcomed the decision of Binance.
“We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world-class fintech companies”
How regulations affect other crypto exchanges?
Another exchange, Bitfinex, also seeks to leave Hong Kong; he seems to be on his way to Switzerland and further exchanges in countries like India are also planning to move abroad for better rules and support on crypto.
For regulators, the protection of retail investors is the most important priority when new forms of assets begin to operate. The decline in the bar, allowing this young sector to flourish, is unreasonable. Despite this Asian regulators need to find a balance before more exchanges lose patience and flee to other regions.