Kraken plans to close its crypto exchange in Japan, operated by Payward Asia, on January 31, 2023, weeks after cutting 30% of its global workforce, or ~1,100
Context & Ripple Effects
Kraken had previously ended its Japan service in 2018 over the cost of operating there. Its planned return to a Japan exit comes alongside a 30% global workforce reduction, tying the local shutdown to a broader pullback rather than an isolated product change.
First-order effects
- Payward Asia will stop operating Kraken's Japanese exchange service on January 31, ending access for Kraken customers in that market.
- Kraken removes a Japan operating unit while its reduced global workforce is being implemented, narrowing the business footprint it must support.
Second-order effects
- Japanese customers using Kraken's service will need to move their trading activity to other available venues, shifting any associated transaction activity away from Payward Asia.
- The paired workforce cut and market exit concentrate Kraken's remaining resources on the jurisdictions and products it continues to operate.
Third-order effects
- Repeated Japan exits suggest that maintaining a local exchange presence can be difficult to justify when operating costs and market conditions force an exchange to prioritize its core footprint.
- If other exchange operators make similar retrenchment decisions, crypto-market access will become more dependent on the providers able to sustain country-specific operations through downturns.
The trend: Crypto exchanges are responding to weaker market conditions by reducing headcount and pruning geographically costly operations.