Kraken, one of the largest cryptocurrency exchange operators in the world, is pulling out of Japan, the company announced in a statement Tuesday.

The pull out comes as regulators in the country ramp up oversight efforts after the $500 million hack of Coincheck, one of Japan’s domestic exchanges, at the beginning of 2018.

Kraken said it is ceasing operations in Japan to focus its efforts on other regions, but market watchers expect that it might be connected to regulatory pressure from the Japanese Financial Services Agency (FSA). Kraken said it might consider re-entering the market at a later point.

Japan has given out a number of licenses for cryptocurrency exchanges to operate in the country. Kraken, however, was given special permission to operate without one.

Japanese regulators have been cracking down on a number of unlicensed exchanges in the wake of the Coincheck hack.

Notably, regulators in the country issued a warning to Binance, the world’s largest cryptocurrency exchange, in March. A number of exchanges have shut their doors in the country, including Mr. Exchange and Tokyo Gateway, per reporting by CoinDesk.

Yo Sub Kwon, the founder of Coinsetter, a cryptocurrency exchange acquired by Kraken in 2016, told Business Insider the regulatory response is “an overdue reaction.”

Speaking specifically about Kraken, Kwon said “they are going to pull out temporarily and go back to the FSA when they are ready to register with them.”

Japan has been a notable haven for cryptocurrency trading. 40% of bitcoin trading from October to November was conducted in yen, according to a Nikkei report cited in a note by Masao Muraki, a global financial strategist at Deutsche Bank.

The country was among the first to designate bitcoin as a legal tender and it has one of the most well-established regulatory environments for cryptocurrencies.

As for Kraken, the company oversees the trading of as much as $41 million worth of bitcoin on its platform in a 24-hour period, according to data provider CoinMarketCap.

A spokesperson for the company did not respond to a message seeking comment.



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