New Kraken Report Illustrates U.S. Reg Aggression on Cryptocurrencies


In the crypto news today, Felix Mollen over at Cryptopotato is reporting on a breaking 2018 report from Kraken, one of the world’s major cryptocurrency exchanges and one that has been controversial in terms of U.S. regulation.

Kraken, which is based in the U.S., nevertheless has had its problems with government agencies and attorneys. Founded in 2011 and launched in 2013, Kraken is a big player in Bitcoin: it is responsible for providing Bitcoin pricing to the Bloomberg terminal, and is the single largest Bitcoin-Euro exchange in the world.

Inquiries from the New York Attorney General’s office in 2018 focused on how Kraken would fight money laundering and help to protect customer assets.

One of Kraken’s responses was that it’s unfair to target one area of the cryptocurrency world for investigating the types of issues that are rampant within the sector.

Now, the Kraken 2018 transparency report shows almost 500 law enforcement requests last year.

“According to the report, the number of requests received in 2018 is almost 300% higher than that in 2017,” Mollen writes. “Authorities issue the majority of the requests (315) within the US. Second is the UK with 61, followed by Germany with 34 and France with 20.”

The piece cites a total of 11 to agencies targeting cryptocurrency markets – one is the FBI, which has sent subpoenas to Kraken, according to reports. The FBI alone, press reports estimate, has over 130 cryptocurrency investigations in play right now. Kraken also received 40 subpoenas from the DEA and 91 from Homeland Security, according to reports.

“This results in mounting pressure not only on cryptocurrency exchanges but on users as well, as the increasing costs of running a cryptocurrency business will ultimately take their toll,” Mollen writes.

A piece covering the issue at Coindesk talks about how Kraken sees U.S. subpoenas as a “barrier to entry” in the cryptocurrency market.

“You can see why many businesses choose to block U.S. users,” tweeted a Kraken exec recently in response to mounting regulatory behavior. Kraken proponents argue that related responses could involve petabytes of data just for investigating minor trading activity, and have characterized the New York AG office as harassing and stalking the company.

All of this shows how there are U.S. regulations that are bottlenecks for entry. Keep an eye on upcoming news to see how regulators are willing to work with cryptocurrency exchanges and where markets might go this year.