Content Directory:

· Actively expanding business beyond encrypted transactions

· Kraken faces huge regulatory pressure this year

BlockBeats News, September 28th, according to sources cited by Bloomberg Law, cryptocurrency exchange platform Kraken plans to launch trading services for US-listed stocks and exchange-traded funds (ETFs) in 2024. This marks the first time that Kraken, which has a 12-year history, has ventured beyond its cryptocurrency business. The new service will be provided through its newly established department, Kraken Securities, and will initially be launched in the United States and the United Kingdom. Currently, Kraken has obtained the necessary regulatory licenses in the UK and has applied for broker-dealer licenses with US financial regulators.

Actively expanding business beyond encrypted transactions

BlockBeats reported on July 20th that Kraken has appointed Mark Jennings, a senior hedge fund professional, as the CEO of its institutional crypto asset derivatives trading platform Crypto Facilities in the UK. Kraken acquired Crypto Facilities for a nine-figure sum in 2019. For regulatory reasons, the two entities maintain separate brands and operate as independent entities. Jennings reportedly joined Kraken in January 2022 as the head of European operations.

On August 2nd, Jesse Powell, co-founder of Kraken, commented on FTX's 2.0 reboot plan, stating that FTX 2.0 will be worse than starting from scratch. He pointed out that FTX 2.0 has no team, no technology, no license, no bank cooperation, and the brand has been damaged. He suggested that the custodian should auction the domain name and trademark to the highest bidder. Anything else is just an attack on delusional creditors' expense extraction.

Later, Crypto Facilities negotiated with the UK Financial Conduct Authority on September 7th to expand its services to custody a wider range of client assets, seeking to enter the void left by the collapse of the cryptocurrency derivatives market after FTX. Mark Jennings, CEO of the company, said that Crypto Facilities provides cryptocurrency asset futures contracts for institutional investors and is currently discussing providing futures contracts priced in their fiat currency for its clients. It is expected that this negotiation process will take 6 to 12 months.

On September 26th, Kraken announced that it has obtained an Electronic Money Institution (EMI) license from the Central Bank of Ireland and registered as a Virtual Asset Service Provider (VASP) with the Bank of Spain, enabling Kraken to expand its Euro fiat services by partnering with European banks. Additionally, Kraken's new VASP registration will allow it to offer cryptocurrency exchange and custody wallet services to residents of Spain.

Kraken faces significant regulatory pressure this year

The US government has been taking active actions in regulating the cryptocurrency industry. On February 9th of this year, the SEC announced a settlement with the cryptocurrency trading platform Kraken. Kraken agreed to "immediately" stop providing on-chain staking services to US customers and pay a $30 million fine to settle the SEC's charges of providing unregistered securities.

Related reading: "Kraken pays $30 million for settlement, is the US SEC's crypto regulation all bark and no bite?"

"Affected by the collapse of institutions such as FTX, the United States has begun to strengthen its supervision of the cryptocurrency field. Recently, the US SEC issued a statement on its official website stating that the agency will make the regulation of emerging technologies such as cryptocurrencies its top priority in 2023. It will investigate broker-dealers and investment advisers who use emerging financial technologies (including encryption technology), including whether they have met the "prudent standard" expected by investors, and whether they regularly review and update risk management procedures."

It is worth mentioning that the US regulatory agency will also tighten tax supervision on US investors. The US Internal Revenue Service (IRS) submitted a petition to the court on Thursday seeking approval to enforce a subpoena against the Kraken cryptocurrency trading platform and its subsidiaries. In the petition, the IRS stated that it issued the subpoena for the first time in 2021.

However, Kraken refused to comply with the subpoena from the US Internal Revenue Service. The IRS is concerned that this will be a heavy burden and the scope is too broad.

Therefore, on July 1st, Kraken, a cryptocurrency trading platform, was ordered by a judge to hand over certain personal information of its users, including names, dates of birth, physical addresses, phone numbers, and tax identification numbers, to comply with the request of the US Internal Revenue Service, according to a report by The Block. The order requires Kraken to identify accounts with annual cryptocurrency trading volumes of at least $20,000 between 2016 and 2020.

On July 5th, according to DL News, a court in California, USA ruled that the cryptocurrency trading platform Kraken must comply with the request of the US Internal Revenue Service (IRS). A Kraken spokesperson stated that if this information is leaked by the IRS, customers will face identity theft and other harm, and Kraken has prevented this from happening.

2 days later, according to The New York Times, the Federal Bureau of Investigation (FBI) searched the home of Jesse Powell, former CEO of Kraken, in March of this year as part of an investigation into his hacking and cyberstalking of a non-profit arts group. Since at least last fall, FBI agents and federal prosecutors in Northern California have been investigating Powell. A Kraken spokesperson said the investigation is unrelated to the company and there is no reason to believe that the authorities are investigating other potential issues.

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