Kraken plays nice with the SEC just as the NY AG comes down hard on them

Kraken, the prominent US-based cryptocurrency exchange which famously spit fire at the state of New York when the Attorney General of the state requested regulatory compliance information in April, seems to have changed its tune. As the New York Attorney General today released a report referring Kraken to the authorities for digital currency regulatory violations, Kraken has slipped the word to Bloomberg that it may play nice with federal regulators. According to Kraken CEO Jesse Powell: "We would probably get registered as a broker-dealer and then an ATS. I don’t think it necessarily helps the business. I think we’re doing everything right anyway.’’ The SEC regulates ATSs, or alternative trading systems, rather than the state regulators that Kraken has previously dismissed.

Of course, Kraken's CEO did slip in the confident gem that they're doing everything right anyway! He then listed a number of conditions that the SEC would need to meet for Kraken to pursue registration:


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To make registering with the SEC worthwhile for Kraken, the closely held firm would need more clarity from the regulator about which digital coins are securities and how those tokens can trade legally, Powell said. For example, the SEC could provide some sort of amnesty for coins that are deemed illegal securities.

Based on Powell's demands, this story looks to be in the early innings. And his team is playing with a strong roster given the reported $1 million that Kraken has donated to Washington DC-based cryptocurrency lobbying firm Coin Center. (Source: Bloomberg)

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Mike Dudas is one of the founders of The Block and was the CEO until April 2020 and a board member until April 2021. Prior to starting The Block, Mike was co-founder and CRO of Button, the leading global, mobile performance marketing platform. Mike is a builder of mobile commerce businesses, having worked at Google, Braintree/Venmo and PayPal. Early in his career, Mike worked in corporate M&A and strategy for Disney. Mike earned a BA from Stanford and an MBA from Kellogg.