Despite a difficult regulatory climate and the recent closure of its on-chain staking services for U.S. customers to resolve Securities and Exchange Commission claims that it had broken securities laws, Kraken is continuing with preparations to build its own bank.
According to Marco Santori, chief legal officer of Kraken, “Kraken Bank is very much on schedule to open, very soon,” on The Scoop podcast with Frank Chaparro of The Block. “We’ll have the ballpoint pens with the little chains. We’re planning to place an order for thousands of them and fasten them to desks at Wall Street institutions all around the world. by using our logo.”
An industry currently struggling with the extensive effects of FTX’s bankruptcy would be in turmoil if a new bank emerged from the crypto sector. During the last several weeks, there have been a number of enforcement actions, and regulatory uncertainty is growing. The Kraken deal, which includes $30 million in penalties, should “put everyone on notice in this marketplace,” SEC Chair Gary Gensler said last month.
Santori refused to go into specifics about the SEC settlement but said that staking only comprised a tiny portion of Kraken’s earnings. He continued by saying that Kraken neither acknowledges nor rejects any of the charges made in the lawsuit.
He said that the SEC move would force American customers who seek staking services overseas to far riskier exchanges, saying, “That does, of course, affect fairly drastically our product mix in the U.S. It’s representative of a sad scenario where the United States, he remarked. “Our regulatory climate practically forces customers to utilize offshore exchanges that will happily take their business with so little as a VPN,” the author says.
Santori said that Kraken’s banking ties were safe and that the exchange has a “diversified collection of banks all over the globe” in light of the widely used Silvergate Exchange.
The network is being shut down by crypto-friendly bank Silvergate due to capitalization issues.
He did warn that more caution in the banking industry would impede innovation.
Banks would once again be very selective about the accounts they establish, he said. “Wall Street will be unharmed. Coinbase and Kraken will be fine. Yet over the next five years, it will be very difficult for the person or people who have a novel concept for how to support the crypto economy. Without a doubt.”
Santori said he did not believe there had been a covert crackdown on the crypto industry in the United States. Nonetheless, he warned that once the nation’s presidential election gets underway, the problem may turn into campaign fodder.
He said there isn’t any anti-crypto organization meeting in secret every week in Washington. “Yet, there is a group of authorities who all happen to have a same opinion about cryptocurrencies. They seem to feel that what cryptocurrency is right now is what matters and that what it may become in the future is irrelevant.”
