Asia has the population to make setting up a cryptocurrency exchange there exceptionally lucrative, but more and more restrictions are now seeing leading exchanges pull out of the area. While there’s no denying that there are millions of investors all too ready to invest in cryptocurrencies – with 3.5 million in Japan alone – it’s the governments that have caused exchanges to take another look at the feasibility of their presence.
Japan, in particular, is the latest country to impose restrictions and legislation that have caused the largest cryptocurrency exchanges to take a look at their bottom line. With regulatory uncertainties and continuously moving goalposts, one of the largest exchanges, Kraken, will be suspending services by the middle of June. They have been serving Japanese investors since late 2014.
A Kraken spokesperson said choosing to pull out of Japan was not a decision made lightly but doing so had enabled them to focus on building their presence in other areas. While they were tight-lipped about the real reason, it’s easy to assume that new regulations in Japan have made it a logistical nightmare to keep providing investment opportunities in the country. It’s not off the table to consider revisiting Japan in the future, but right now, Japanese investors are asked to remove their funds by the end of June.
Japan’s tighter restrictions were made to increase transparency, and therefore safety, as well as protect consumers. To do so, they approved just 17 different currencies and 11 exchanges.
Japan is not the first country to cause problems for both investors and exchanges, as more and more nations aim to tighten their belts on this new phenomenon. China banned Initial Coin Offerings (ICOs) and closed exchanges, while South Korea is looking to halt anonymous trading. They have also put steps in place to prohibit ICOs as well. Restrictions have even been considered in Australia, with legislators and the financial intelligence agency looking into laws to control its use.
Investing in cryptocurrency is only getting tougher, so those looking to invest are encouraged to take a look at their country’s legislation and proposed laws before going ahead.