US-based Crypto Exchange, Kraken, is taking a leap into the German market, partnering with local asset manager DLT Finance, to broaden its reach in Europe. With the launch of this collaboration on 10 July 2024, German investors will have access to an innovative line up of crypto products.
Kraken’s expansion strategy unfolds against the backdrop of the US crypto market’s regulatory uncertainties, with recent Securities and Exchange Commission (SEC) actions fuelling ubiquitous debate.
Is congress really going to let unelected regulators like Gary Gensler unilaterally decide America is closed for business?
Uniswap, Coinbase, Kraken, Consensys, Robinhood.
All less than 12 yrs old.
Suing our best American companies just because he hates crypto.
Fire Gensler.
— RYAN SΞAN ADAMS – rsa.eth 🦄 (@RyanSAdams) May 6, 2024
Regulatory Arbitrage: Kraken Chooses Europe Over US
Building on its previous endeavours, Kraken’s alliance with DLT Finance marks a strategic pivot towards harnessing localised expertise and regulatory compliance in Germany.
With over 5% of Germans owning crypto assets, Kraken CEO David Ripley insisted that this move aims to attract potential clients, particularly as Europe shifts towards a pan-European crypto regulatory framework.
“Over 5% of Germans already own crypto assets, and we’re confident our innovative product suite – along with excellent local language client service support – will be attractive to prospective clients as crypto continues to become more mainstream across Europe,” Ripley stated.
This isn’t Kraken’s first rodeo in Europe. The exchange has hit major milestones, like getting E-Money Institution (EMI) authorization from the Central Bank of Ireland and becoming a Crypto Service Provider (CSP) in the Netherlands.
SEC v/s Kraken : What’s Next?
The SEC’s scrutiny of leading cryptocurrency exchanges and trading platforms, including Kraken, Coinbase, and most recently – Robinhood, has raised crucial questions about regulatory boundaries and their impact on innovation within the crypto world.
State attorneys general from Montana, Arkansas, and Texas have also opposed the SEC, especially regarding its lawsuit against Kraken. They argue that the SEC is overstepping by broadly defining “investment contracts” and insisting not all cryptocurrencies are securities by default.
Robinhood is joining the fight against the SEC's crypto crackdown, despite other companies like Coinbase or Kraken having more at stake. https://t.co/xCvfRQ0KJT
— Axios (@axios) May 7, 2024
Last year, the SEC sued Kraken for failing to register as a securities broker, clearinghouse, or trading platform. This move by the SEC is in line with constant regulatory action against crypto firms like Coinbase, Binance, and the US arm of Bittrex.
Is the SEC Overreaching?
Due to the SEC’s evidently aggressive and dogmatic nature against crypto companies and digital assets, Kraken is in a position where it is choosing regulatory arbitrage against the US.
Industry experts believe that the US crypto investors are losing, while Europe gains – as is the reason many banks setup shop in the UK over the past two decades. The question lingers: Is the SEC’s strict enforcement actions overreaching, hampering innovation, and disrupting the US crypto industry foundations?
EXPLORE: Robinhood v/s SEC: A Pivotal Battle Over Crypto’s Regulatory Future
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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