Kraken recently declared their plan to open a bank of their own, which was revealed by Marco Santori, the platform’s chief legal officer, to Frank Chaparro on The Scoop podcast. This statement comes as Kraken faces regulatory difficulty from the SEC for breaking securities laws and being forced to end its staking program in America. It is an exciting development that could be both beneficial and profitable for those involved with it!
Kraken Obtained a License Years Ago
In 2020, Kraken proudly proclaimed that it had obtained a banking license from the state of Wyoming in America. This approval granted Kraken the necessary authority to introduce new services, such as cryptocurrency debit cards, at the start of 2021. As a result, Kraken became the first crypto exchange to establish its own bank! With this special purpose depository institution permit, users will have access to secure digital asset custody and be able to transfer between fiat and crypto without difficulty or delay.
Kraken Bank Will Be A Banking Bridge
Kraken Bank aspires to be a hassle-free conduit for transitioning between cryptos and traditional money. To accomplish this, it will offer its customers services and products that are ever-growing in number. These banking features range from digital asset custody, funds transfer and financing options, and fiduciary management account to custodial service of digital assets.
Kraken Bank is poised to provide various services, including an e-crypto debit card, comfort letters for businesses, deposit verification, and proof of funds certificates. Additionally, the bank plans to offer wealth management solutions and cash management products through its online and mobile banking platforms.
Meanwhile, Tensions Continue Between Regulators and the Crypto World
The recent proclamation from Kraken bank has placed the cryptocurrency market in an intricate regulatory landscape. US regulators have been persistently intensifying their grip on this sector, resulting in increased sanctions and disruptions to operations.
With this in mind, Silvergate Bank declared a week ago that it needed to reevaluate its operations due to the present atmosphere of the cryptocurrency industry. The combination of current business and regulatory issues led Silvergate Bank to halt activities on its Silvergate Exchange Network despite being one of the few crypto-accommodating banks facilitating payments for digital currency exchanges.
Seeking to ease customer worries, Kraken’s legal manager discussed their platform’s banking relationships. He went on to guarantee that these connections are firmly established and that they communicate with numerous diverse banks around the world. Unfortunately, FTX’s failure has caused a considerable amount of destruction in the crypto sector, so this new bank comes alongside increasing regulatory pressure from the SEC; last month alone saw them fined $30 million.
On top of this, Kraken was compelled to discontinue its staking service, which had been generating annual profits. According to Marco Santori, the suspension of Kraken’s U.S.-based program has a considerable impact on their product line. He also pointed out that due to these SEC regulations, American consumers will most likely resort to foreign platforms, which may not be trustworthy.
