Kraken set to launch US crypto bank despite regulatory shocks
San Francisco-based cryptocurrency exchange Kraken is reportedly nearing the launch of its own US bank, weeks after it paid $30 million to settle SEC charges it offered unregistered securities.
Kraken already has approval from a state regulator in the US to launch a crypto bank under an SPDI charter. It applied for a bank charter under Wyoming’s Special Purpose Depository Institutions Act.
An SPDI bank charter allows Kraken to operate an independent bank that will reduce reliance on third-party financial institutions and allows the exchange to offer deposit, custody and trust services for digital assets.
“Kraken Bank is very close to launch, very soon. We’re going to have those pens with the little bullet chains. We’re going to order thousands of them and stick them on the desks of Wall Street banks everywhere with our logo,” says Kraken’s head of legal Marco Santori to The Block.
As part of the settlement agreement, Kraken closed its US cryptocurrency venture, which Santori said had been a small percentage of the exchange’s revenue. However, the SEC alleges that Kraken held assets worth over $2.7 billion for US clients, earning it about $147 million in revenue.
In addition, Kraken was hit with a $362,158 fine in November to settle its civil liability for apparent violations of US sanctions against countries such as Iran. Authorities investigated Kraken’s transactions with Iranian users since 2019. In addition, the company failed to inform OFAC of these transactions and did not voluntarily disclose violations of US sanctions.
“It is actually a sign of a rather unfortunate situation here in the state. We have a regulatory environment that essentially forces users to use offshore exchanges that are happy to accept their business with as little as a VPN,” he added.
Stablecoin issuer Circle is also in discussions with US regulators to become the fourth crypto-native company to score a federal trust charter through the Office of the Comptroller of the Currency (OCC).
Circle expects to act as a compatible bridge to the US dollar payment system and its stablecoin USDC. However, it will be required to comply with all federal and state laws, including “know your customer”, anti-money laundering and related regulations. It will also comply with SPDI and digital asset laws, which include requirements for fiat deposits to be 100% reserved and meet consumer protection standards.
