Kraken, currently ranked as the third top crypto exchange on CoinMarketCap, is on track to launch a crypto-based bank. This decision is counteroffensive to the regulations imposed on crypto exchanges in the United States.
Kraken announced its plan about launching its own bank on Twitter. A Twitter user tweeted about Kraken’s bank, and then, the official account of Kraken Support answered the user’s tweet. According to the tweet of the official account, Kraken will launch its own bank soon.
Wyoming authorized the bank as a Special Purpose Depository Institution (SPDI), allowing it to prioritize asset protection. Kraken will be the first company awarded a U.S. banking charter, and the company stated:
“We’re looking into products like deposit accounts in USD and crypto assets, multiple funding and payments options, institutional custody products, IRAs, and many more.’’
Kraken’s bank will have safety measures to protect its clients in case of a bank run. The company intends to keep a surplus of its capital as a reserve to cover the balance of all clients.
Kraken is one of many companies in the crypto space that have been facing scrutiny mainly in the past few weeks. Regulators in the U.S. have been taking action against exchanges, specifically against unregistered securities given to American clients.
The Securities and Exchange Commission (SEC) considers securities to be of higher risk, mainly because they are subject to a low level of regulatory supervision.
The new CEO of Kraken, Dave Ripley, has declined to register with the SEC and opted not to talk about the SEC settlement. The exchange did release, however, that staking had been a minuscule percentage of its revenue without acknowledging nor denying the charges in the case.
In retaliation to the allegations, Kraken decided on March 1 to stop dealing with the crypto-focused Signature Bank. Noncorporate users will be unable to deposit or withdraw U.S. dollars by using Signature. The deposit and withdrawal functions will be discontinued on March 15th and 30th respectively.
Regulators’ continuing investigation does not bode well for the sector. Kraken has paid $362,000 to resolve a lawsuit involving sanctions breaches with the Office of Foreign Assets Control (OFAC).