Coinbase Stops Operations in Japan Due to Market Volatility

Coinbase Global Inc, one of the biggest and publicly-listed (NASDAQ:COIN) cryptocurrency exchanges, announced on Wednesday it is halting its operations in Japan due to the severe market slump and heightened volatility observed during previous months.

Harsh Conditions Force Coinbase to Make Tough Decisions

According to Coinbase's blog post, all customers from Japan must withdraw their crypto and fiat holdings before 16 February 2023. Any cryptocurrencies that remain in accounts after that date will be converted to Japanese yen and sent to the Guaranty Account at the Legal Affairs Bureau under local regulations. Users will then have to apply for recovery of their funds at the Bureau.

"Due to market conditions, our company has made the difficult decision to halt operations in Japan and to conduct a complete review of our business in the country. However, we are committed to making this transition as smooth as possible for our valued customers," Coinbase wrote in a blog post published on Wednesday.

The exchange assures that it has segregated its customers' assets in cryptocurrencies and Japanese yen and that everyone can withdraw them without any major delays. Coinbase recommends funds be transferred to another exchange, Coinbase Wallet or a self-custody wallet. The platform will stop accepting deposits as of 20 January 2023.

In response to the news, Coinbase's shares on the Nasdaq exchange fell by 2.75% to $52.65 per share in pre-market trading hours. However, these are still at the highest levels in more than a month.

Watch this recent FMLS22 executive interview with Lory Kehoe, the Director of EMEA Business Development at Coinbase.

Coinbase Cuts Jobs

Last week media outlets informed that Coinbase was going to close most of its operations in the Japanese market, following a plan for global job cuts. Earlier this year, the exchange announced its plan to cut its workforce by 20%, or 950 people, as part of a second round of layoffs.

"We've decided to wind down the majority of our operations in Japan, which led to eliminating most of the roles in our Japan entity," Nana Murugesan, a Coinbase executive, said during an interview last week.

The current suspension of operations in Japan seems to confirm her words. Although Coinbase has not made it clear that it intends to leave the country entirely, only to conduct a comprehensive review of its business, analysts have speculated about its plans to move out.

Coinbase's job cuts and suspension of operations in Japan come at a time when rival exchange Binance is announcing a renewed hiring spree and deciding to return to the Japanese market as local regulations for cryptocurrency companies loosen.

Crypto Exchanges Feel the Digital Assets Blues

However, Coinbase's recent decisions do not seem to be isolated. In November, another major cryptocurrency exchange Kraken announced that it would lay off up to 30% of its employees. Earlier this year, Huobi made a similar announcement, looking to reduce its workforce by 20%.

Furthermore, last week, Crypto.com announced a potential headcount reduction, willing to cut its workforce by 20%. The "significant damage" to the industry after the collapse of the FTX crypto exchange explains the decision.