Coinbase, the largest US-based cryptocurrency exchange, announced on Wednesday that it will be halting its operations in Japan as part of a larger operational review.
The company stated that due to market conditions, it has made the difficult decision to conduct a complete review of its business in the country and to halt operations. All Coinbase Japan customers will have until February 16th, 2023 JST to withdraw their fiat and crypto holdings from Coinbase.
Any crypto holdings remaining with the platform after February 16th January will be converted into yen and sent to a guaranty Account at the Legal Affairs Bureau for retrieval.This decision comes after Coinbase announced that it would be laying off 950 workers, or roughly 20% of its staff, last week.
The company stated that this decision would reduce its operating expenses by 25% between its fourth quarter 2022 and first quarter 2023 earnings results. Coinbase is still targeting a previously stated “loss guardrail” of negative $500 million adjusted EBITDA for 2022.
Coinbase launched its Japan operation on August 18th, 2021, which included a partnership with Mitsubishi UFJ Financial Group (MUFG), one of the country’s largest banks. The company’s shares were down about 1% early Wednesday and have risen by about 50% since the beginning of January.
However, they lost more than 80% during 2022. Last week, S&P Global Ratings downgraded Coinbase’s credit and senior unsecured debt rating to BB- from BB.This move by Coinbase to halt operations in Japan is a significant one as it represents the company’s withdrawal from one of the world’s most active cryptocurrency markets.
Why Coinbase is leaving from Japan?
The company’s decision to conduct a complete review of its business in Japan is a clear indication that it is looking to restructure its operations in the country. As the cryptocurrency market continues to evolve, it is likely that other exchanges will also be forced to make similar decisions in order to remain competitive.
This decision to halt operations in Japan is part of a larger cost-cutting effort by Coinbase. Last week, the company announced that it would lay off 950 workers, or roughly 20% of its staff, as part of a plan to reduce operating expenses by 25% Coinbase’s decision to halt operations in Japan is a significant setback for the company, which had only launched its Japan operations in August 2021 in partnership with Mitsubishi UFJ Financial Group, one of the country’s largest banks.
By spot market trading volume, Coinbase is the second-largest cryptocurrency exchange and the largest of those regulated in the United States, accounting for 0.87% of the past year’s trading, though the number has increased over the past month to 0.98%. The news of Coinbase’s decision to halt operations in Japan has had a negative impact on the company’s shares, which were down about 1% early Wednesday.
