Kraken ‘Fighting the Fight’ Behind the Scenes With Regulators

Crypto exchange Kraken originally submitted an application for a Federal Reserve master account October 2020. And as its chief legal officer pointed, the U.S. central bank still hasn't rejected it. 

On Decrypt’s gm podcast, Marco Santori also said that the San Francisco-based firm was “fighting the fight” behind the scenes to get connected to the same FedNow network that all other big financial institutions use to settle transactions. 

Getting a master account is a hot topic in the crypto world because it would allow crypto firms access to the same system all major, traditional, financial firms use to settle transactions. 

But it’s not easy: Right now, crypto bank Custodia is currently suing the Fed over its membership denial. 

“Kraken does a lot,” he said. “We do a lot behind the scenes. You don’t see us under the spotlight, probably as much as you see other companies but sometimes it’s not the most effective way to get things done,” he said when asked why the exchange wasn’t fighting the Fed as publicly as Custodia. 

Kraken has been in hot water with regulators this year. T—he U.S. Securities and Exchange Commission hit the San Francisco-based digital asset exchange with a $30 million fine for violating securities laws back in February. 

The regulator alleged that Kraken failed to register the offer and sale of their crypto asset staking-as-a-service program. 

Kraken—which consists of Payward Ventures, Inc. and Payward Trading Ltd.—agreed to halt its staking service for American clients but did not admit or deny the allegations in the SEC’s complaint. 

The fine came as the SEC stepped up its crackdown on major American crypto companies; SEC Chair Gary Gensler wants to crack down on all the coins and tokens he believes are unregistered securities and has charged a number of digital asset companies as a result. 

But Gensler has faced criticism—particularly from Republican lawmakers—who say the top regulator is stifling regulation in the world’s largest economy. 

Though Santori didn’t seem fazed by the crackdown when speaking to Decrypt, adding that getting targeted by regulators was all part and parcel of being in an innovative industry like crypto. 

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“If the SEC or a federal regulator never gets involved, you might not be trying hard enough,” he said, speaking about company lawyers wanting to avoid confrontations with regulators.