Kraken, a leading US-based cryptocurrency exchange, is reportedly considering an ambitious move to venture into the territory of traditional stocks and exchange-traded funds (ETFs). An expansion of this magnitude would mark Kraken’s first foray beyond the sphere of cryptocurrencies, a venture reportedly articulated under a new division named Kraken Securities. Expected to be operational by 2024, this initiative is currently awaiting regulatory approvals.
This prospective business expansion hinges upon the successful registration of Kraken as a virtual asset service provider (VASP) in legally compliant nations such as Spain and Ireland. Further to this, Kraken has also received the green light to operate in the UK, fortifying its global presence. This follows the successful acquisition of the e-money institution (EMI) license from the Central Bank of Ireland and VASP licenses in Italy and Ireland.
Kraken’s vice president for global operations lauded Europe’s receptive regulation towards cryptocurrencies, adding that the company is keen on integrating into Ireland and Spain’s vibrant local fintech sectors, and further diversifying its investments Europe-wide.
However, while in the throes of expansion, it is crucial to note that Kraken isn’t far removed from regulatory scrutiny, particularly in the US. The company is in the midst of a significant controversy as it was ordered by a Californian judge this past July to provide extensive user information to the Internal Revenue Service (IRS) in light of a tax evasion investigation. This has provoked unsavory evaluations of the company in the media, amidst concerns around data privacy.
The court order specifies that Kraken must provide information on users conducting transactions exceeding $20,000 per year, compromising user anonymity and privacy, long regarded as the mainstay of the cryptocurrency universe.
Furthermore, Kraken recently had to shutter its crypto staking service and pay a hefty fine to the SEC over allegations of securities law violations in relation to this service.
There is no doubt that expanding operations beyond crypto into traditional assets is a bold move that reflects a growing trend among digital currency platforms. However, navigating regulatory intricacies might pose substantial challenges, given the scrutiny that Kraken and crypto platforms, in general, have been subjected to lately. As we continue to observe this interesting dynamic, the friction between privacy rights, regulatory requirements, and innovative business strategies is becoming ever more prominent. The question begs: Can these aspects coexist harmoniously? This is a viewpoint well worth considering when contemplating the future of digital finances.
Source: Cryptonews
