2 years ago
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The second-largest crypto exchange in the U.S. has targeted three potential European jurisdictions. Powell pointed out that Kraken has been already engaged in discussions with regulators in Malta, Luxembourg and Ireland.
Kraken’s UK subsidiary, Crypto Facilities, already holds authorisation from the UK Financial Conduct Authority to operate a multilateral trading facility (MTF).
Obtaining an MTF license allowed the Kraken-owned firm to expand in ways that more closely resemble a traditional exchange, integrating multiple third-party buyers and sellers. Specifically, the FCA’s coveted approval enables Crypto Facilities to expand its product range and serve institutional clients who are mandated to trade on licensed platforms.
Thanks to its London business, Kraken CEO said his company already complies with the EU’s Fifth Anti-Money Laundering Directive (5AMLD) requirements. However, Kraken is seeking a new European base after Britain’s exit from the European Union.
The move is aimed at ensuring Kraken can continue to serve its non-UK customers and hedge against a no trade-deal Brexit. The process should be completed before the end of the Brexit transition period, after which British-based firms will lose passporting rights that allow them to sell financial services in the bloc.
The Fifth Money Laundering Directive (5AMLD) provides a broad definition of crypto assets and qualifying it as “financial instruments.” Such a broad definition of financial instruments goes beyond cryptocurrencies to cover many related-assets, including security tokens.
Powell told Handelsblatt that Kraken had talks with German financial services regulator BaFin. However, he played down any possibility to obtain a regulatory license there, citing too difficult, restrictive local regulations that make it too expensive for the company to operate in Germany.
Kraken has recently expanded its operations in Asia. In 2020, it re-launched its trading services for Japanese residents, nearly two years after it exited the lucrative market.
Kraken was among the few platforms permitted to offer crypto services without a license in Japan while it sought to meet the rules that established bitcoin as a legitimate payment method. However, the exchange withdrew its services in 2018 due to rising costs of maintaining its business there, but indicated at the time it could return in the future.
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