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Kraken Bank Set to Launch Despite Regulatory Challenges

Kraken, a cryptocurrency exchange platform, is set to launch its bank, despite the challenges posed by the regulatory environment. This was confirmed by Marco Santori, Kraken's chief legal officer, in a recent interview with The Block's Frank Chaparro on The Scoop podcast.

Kraken logo
Kraken logo

Kraken Bank Moving Forward with Launch Plans

Despite recent regulatory hurdles, including the shutdown of its on-chain staking services for U.S. clients, Kraken is pushing forward with its plans to launch its bank. According to Santori, the bank is "on track to launch very soon."

Challenges for the Crypto Industry

The crypto industry is facing a tumultuous time, with the collapse of FTX and increased enforcement actions by regulators. The SEC's recent settlement with Kraken, which included $30 million in fines, has put the industry on notice. Santori declined to discuss the settlement in detail but noted that staking was only a small percentage of Kraken's revenue.

Impact on U.S. Clients

The SEC's move has affected Kraken's product mix in the U.S., pushing American clients who want staking services offshore too far to riskier exchanges. Santori stated that the regulatory environment in the U.S. was forcing users to use offshore exchanges with little to no regulation.

Banking Relationships Remain Secure

Despite the recent shutdown of Silvergate, a crypto-friendly bank, Santori stated that Kraken's banking relationships were secure. The exchange has a diversified group of banks all around the world. However, Santori warned that increased caution on the banking front could stifle innovation in the sector.

Regulatory Climate in the U.S.

Santori stated that he did not believe there was a conspiratorial crackdown on the crypto sector in the U.S. However, the issue could become political as the presidential race starts. According to Santori, there is a group of regulators who feel similarly about crypto and believe that crypto today is what is important and that its future potential is not.