The crypto exchange Kraken does not want to lag behind in the race to dominate the global cryptocurrency market and is actively working on expanding beyond the United States.
The first and also the most challenging destination is Europe. In an interview for the German news outlet Handelsblatt, Jesse Powell, CEO of Kraken, said that the exchange is in the process of getting a license to operate legally on the continent.
Powell expects everything to be ready before the end of 2021. He did not reveal the status of the negotiations but assured that the company is very interested in Malta, Luxembourg, or Ireland, countries with which the Kraken team is already conducting the respective consultations.
Kraken vs. Coinbase
For Kraken, obtaining this license is crucial for its expansion into global markets. The company had the approval of the UK regulatory authorities, but after the Brexit, the license lost its strength as it could only apply to the UK jurisdiction.
Another notable thing is that this strategic move would allow Kraken to compete with its north-American rival Coinbase. This exchange recently went public and is licensed to operate in Germany.
Unlike Coinbase, Kraken has no interest in dealing with German regulators at the moment. Powell explained that the company had had discussions with Germany’s BaFin, but Germany’s regulations are too complex, restrictive, and expensive to be attractive to the company.
However, Kraken does have one advantage over Coinbase: In mid-September 2020, the Wyoming Banking Board voted to approve its application for a special purpose depository institution (SPDI) charter. This recognized Kraken as the first exchange with SPDI bank status in Wyoming and the state’s first newly chartered (de novo) bank since 2006.
A Bank + NFT Marketplace + DeFi Booster
In addition to its expansion into Europe, Kraken is working on other strategies to further spread its influence within the crypto ecosystem.
Following in Coinbase’s footsteps, the exchange is also looking to go public. Powell explained that they are dealing with all the complex regulatory paperwork, but Coinbase’s direct listing cleared the way for them.
“We have to work through a huge checklist with 1000 tasks. For us, it’s good that Coinbase was the first to go public.”
In addition, Kraken is looking to enter the NFTs and Decentralized Finance segment. Powell said that in addition to allowing its users to access the governance rights of DeFi token staking, Kraken follows the scene of games like Axie Infinity or phenomena like Crypto Punks.
“We would like to have a marketplace through which people can trade NFTs. I believe we will see a number of applications for NFTs in the coming years.”
The CFTC Fines Kraken $1.25M for Offering Unregulated Margin Trading
According to a CFTC statement on Sept. 28, Kraken allowed U.S. customers to access products that were supposed to be prohibited for them.
The order requires Kraken to pay a $1.25 million civil monetary penalty and to “cease and desist from further violations of the Commodity Exchange Act.”
The exchange, founded in 2011, allowed its U.S. customers to trade with margin products between June 2020 and July 2021. It was also accused of failing to register as a futures commission merchant (FCM).
No Margin for Americans
CFTC acting enforcement director, Vincent McGonagle, said that to offer such products, the company must register with regulators.
“Margined, leveraged or financed digital asset trading offered to retail U.S. customers must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations,”
He added that the action is part of the CFTC’s broader effort to protect U.S. customers. Margined retail commodity transactions in digital assets are frowned upon by regulators due to the amplified risks of liquidation.
Kraken served as the sole margin provider and had custody of all assets purchased using margin for the duration of the customer’s open margined position, the order stated.
It added that traders could not withdraw assets on margin for 28 days as Kraken held on to them. Additionally, the exchange could “initiate a forced liquidation if the value of the collateral dipped below a certain threshold percentage of the total outstanding margin.”
Kraken settled the CFTC’s claims without admitting or denying them, and the agency noted the firm’s cooperation. In a statement, Kraken said it was committed to working with regulators to ensure rules for crypto assets create a level-playing field for traders globally.
In April this year, Kraken CEO Jesse Powell warned that the crypto industry would likely be subject to heavier regulations in the U.S.
Speaking to CNBC at the time regarding regulation, he said, “I hope that the U.S. and international regulators don’t take too much of a narrow view on this. Some other countries, China especially, are taking crypto very seriously and taking a very long-term view.”
In May, Kraken was ordered by a Californian court to provide information to the Internal Revenue Service on users who executed crypto trades for $20,000 or more between 2016 and 2020.
Kraken pays $1.2 million penalty for violating CFTC order
- The US CFTC filed and settled charges against Kraken for violating its CEA order.
- The exchange was ordered to pay a penalty of $1.2 million.
US cryptocurrency exchange Kraken violated the Commodity Exchange Act (CEA) of the Commodities Futures Trading Commission (CFTC), according to the regulator’s notice on Tuesday. As part of the settlement with the CFTC, the exchange is expected to pay a penalty of $1.25 million and also desist from offering any more transaction that violates the CEA.
Kraken failed to register as CFM
Per the regulator, the exchange failed to register as a futures commission merchant (FCM). It also illegally operated margined retail commodity transactions on digital assets like Bitcoin for over a year, starting from June 2020 to July 2021. The laws require that all margined, leveraged, or financed digital asset trading must be conducted on registered and regulated platforms, especially if offered to retail U.S. customers.
Kraken conducted margin trading for US customers, where it allowed the traders to exit their positions and repay the assets within 28 days. Their positions will be automatically liquidated by the exchange if the price dips or the traders fail to repay the assets within the stipulated period. These transactions should only take place on a registered and regulated exchange; hence, Kraken constituted unlawful transactions per CFTC.
The CFTC has filed and settled the charges against the exchange. “This action is part of the CFTC’s broader effort to protect U.S. customers,” said Acting Director of Enforcement Vincent McGonagle.
Kraken prominence in crypto
Kraken is one of the popular and fast-growing digital currency trading platforms in the United States and globally. Recently, it solidified its presence in the US market by launching its mobile app that allows users to trade over 50 cryptocurrencies. The exchange also has the interest to go public by 2022 via a direct listing.
Kraken App Now Accepts Google Pay And Apple Pay
Kraken is currently one of the leading cryptocurrency exchanges in the world. Its web and app interfaces provide users with an easy-to-use way to buy, sell, trade, and store cryptocurrencies. The crypto exchange currently features a couple of ways to buy crypto on its platform, including credit and debit cards. Now, Kraken has added two more ways for its users to purchase crypto on the app.
Kraken Adds Google And Apple Pay
A recent post on Kraken’s blog announced the addition of two new payments options to the crypto exchange. This comes at a time where crypto investors are looking for new ways to pay for their investments. The crypto exchange announced that it was now adding the option to buy crypto with Google Pay and Apple Pay. Two payments mode which has been growing in popularity amongst users in recent years.
Both Apple Pay and Google Pay will automatically connect with the Kraken app on the device. Enabling easy access to paying with crypto, which can be done in a matter of seconds on the app. The new payment methods do require a minimum purchase of $10 when paying with them. And the maximum purchase currently is $7,500 for each payment method in a 7-day rolling period.
These new additions will make it even easier for users to purchase crypto. And new investors in the market do not have to go through a convoluted process in order to purchase their first crypto.
“With the addition of Apple Pay and Google Pay, we take yet another step forward making it easier to make crypto part of your daily experience.”
Easier Ways To Purchase Crypto
Kraken is not alone in adding innovative payment methods to its platform. About a month ago, Coinbase announced that it was adding the option to purchase crypto on the exchange using Apple Pay. Google Pay capability was added onto the platform later, which now allows users to purchase crypto on the exchange easily.
Payments giants PayPal, at the beginning of the year, had rolled out crypto support for its U.S. customers. August 2021 saw the payments platform extending its crypto offering to the U.K. Allowing users to buy, sell, and store cryptocurrencies on the app.
In a move that took the market by surprise, the U.K. Post Office had also taken a plunge into cryptocurrencies. As of two weeks ago, users of its app EasyID can now directly purchase crypto from German-based crypto exchange Swarm Markets.