(Kitco News) -
Coinbase, the second-largest cryptocurrency exchange in the world, revealed on Wednesday that it will shut down the majority of its operations in Japan as part of its recent plan to reduce overall expenses by 25% to weather the ongoing crypto winter.
“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,” said Coinbase vice president for business development and international Nana Murugesan in an interview with BNN. Murugesan didn’t say how many Japanese employees would be impacted but said that only a few would remain to ensure that customer assets are secure.
Murugesan said that Coinbase Japan CEO Nao Kitazawa is in talks with Japan’s Financial Services Agency (FSA), and next steps for the Japanese unit will be finalized afterward. When asked if Coinbase’s Japanese business could be sold, Murugesan said the company couldn’t comment on the possibility at this time.
Murugesan characterized the winding down of the Japan division as “an example of right-sizing,” and reiterated Coinbase CEO Brian Armstrong’s position that the company remains committed to global expansion.
Armstrong announced in a blog post on Tuesday that Coinbase will be cutting their global workforce by 20% effective immediately.
“We need to make sure we have the appropriate operational efficiency to weather downturns in the crypto market, and capture opportunities that may emerge,” Armstrong wrote. “Therefore, I've made the difficult decision to reduce our operating expense by about 25% Q/Q, which includes letting go of about 950 people.”
This is the second round of layoffs at Coinbase in seven months, as the exchange already reduced staff by 18% in June. Armstrong wrote that “in hindsight, we could have cut further at that time.”
Armstrong said that the layoffs mean Coinbase will also shut down “several projects where we have a lower probability of success,” but he did not specify which projects world be affected. “Our other projects will continue to operate as normal, just with fewer people on the team.”
Coinbase is the latest crypto exchange to announce significant staff reductions in the past week as digital asset firms fight to weather the crypto winter. Houbi Global announced they were laying off 20% of their staff on Jan. 6, and crypto lender Genesis cut 30% of their employees on Jan. 4.
Coinbase processes $1.9 billion in trade volume every day, second only to Binance’s $7.9 billion, according to crypto data firm Messari. But this is far less than the over $5-7 billion they averaged per day in late 2021, and with Coinbase making approximately 90% of its revenue from trading fees, the exchange has had no choice but to reduce expenses accordingly.
Fears about the solvency of exchanges have also resulted in customers withdrawing their crypto and opting for self-custody instead. Data from CryptoQuant shows that the number of Bitcoin held on exchanges fell from 2.5 million on Nov. 5, a week before FTX declared bankruptcy, to 2.1 million as of Dec. 10, 2022.
Shares of Coinbase were down 3% early in the session on Wednesday, trading at $41.93 at the time of writing. The stock has lost over 80% of its value over the past 12 months.
