According to Reuters, the cryptocurrency exchange announced its withdrawal from Japan on 18 January 2023, just a few days after it announced a series of layoffs due to low demand for digital assets. According to Oppenheimer analysts cited by the same source, the company has been keeping a close eye on the Japanese crypto market for some time but obtained its license from the Japanese regulator around a year and a half ago.
When it launched in Japan in August 2021, the cryptocurrency exchange aimed to be fully compliant with local regulations and to become a trusted exchange among Japanese customers. Back then, they also announced a partnership with Mitsubishi UFJ Financial Group (MUFG) in a bid to help people in Japan access the platform quickly and begin trading on the exchange by offering MUFG Quick Deposit for all customers in Japan from day one.
According to a Coinbase blog post, Japanese Coinbase users have until 16 February to withdraw their assets. Customers can withdraw their fiat currency and cryptocurrency holdings to other crypto service providers, the Coinbase Wallet, or other self-hosted wallets. Alternatively, users can liquidate their portfolios and withdraw Japanese yen to their local bank accounts.
Once the deadline has passed, all the remaining crypto assets held by Coinbase’s customers in Japan will be automatically converted to JPY. After 17 February, Coinbase will deposit the remaining Japanese yen balance with the Legal Affairs Bureau in accordance with legal requirements. If customers do not complete the withdrawal of Japanese yen by the due date, they will have to collect it from the deposit.
In January 2023, New York financial regulators uncovered that cryptocurrency exchange Coinbase violated anti-money laundering laws by failing to conduct adequate background checks. As a result, Coinbase will have to pay a USD 50 million fine to the New York State Department of Financial Services and will also have to spend USD 50 million on improving its compliance program. Coinbase disclosed that this investigation was in progress in its annual 10k filing in 2021.
The regulators found that by the end of 2021, Coinbase had a backlog of over 100.000 unreviewed transaction monitoring alerts, plus a backlog of 14.000 users requiring enhanced due diligence.
Regulators say that Coinbase did not have enough staff to keep up with growing compliance needs. When Coinbase laid off 18% of its workforce in June 2022, CEO Brian Armstrong said that the cuts were a result of over-hiring after the company’s expansion in 2021.
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