Amid the several downturns in the crypto market, including the Silvergate fallout and regulatory crackdown, the U.S.-based cryptocurrency exchange Kraken has unveiled its plans to launch a banking institution.
This was revealed by Marco Santori, Kraken’s Chief Legal Officer, in a podcast with The Block. This update comes when the crypto industry is experiencing a downtrend due to negative news from Silvergate and several backlashes from regulators.
Kraken To Launch Its Own Bank
Marco on the Scoop Podcast says a plan to launch the first industry-focused bank is coming. The chief legal officer added:
Kraken Bank is very much on track to launch, very soon, We’re going to have those pens with the little ball chains. We’re going to order thousands of them and attach them to the desks of Wall Street banks everywhere. With our logo.
The upcoming bank to be launched by Kraken has raised speculation among the community on whether a bank originating from the crypto sector can be trusted even after the crash of the once-known largest crypto exchange FTX.
Its collapse has negatively affected the confidence in the nascent sector. The mismanage customer funds from the founder and the CEO, also known as Sam Bankman-Fried (SBF), led to the exchange’s downfall.
In addition, the Silvergate exchange network in the crypto industry has been compromised, as this financial institution questioned its capacity to continue operating; Santori said Kraken’s relationship with banks has the exchange talking with diverse “groups of banks around the world.”
Adding that an increasing caution on banking around the crypto sector could hinder innovation within the ecosystem. “We’re returning to an era where banks are very cautious about what accounts they open,” said Santori while adding:
Wall Street is going to be fine. Kraken and Coinbase are going to be okay. But for the guy or gal who has a new idea about how to provide infrastructure to the crypto economy, it’s going to be a really tough road over the next few years for them. No question.
Kraken’s Recent Saga With The SEC
Notably, this news comes after Kraken’s recent conclusion with the Securities and Exchange Commission (SEC). Earlier this year, the SEC charged the crypto exchange with violating security laws via its staking service.
The US regulator charged the Kraken crypto exchange subsidiaries, Payward Ventures Inc and Payward Trading Ltd, over the failure to register the crypto exchange staking-as-a-service program.
However, months later, Kraken agreed with the SEC to pay a fine of $30 million in disgorgement, prejudgment interest, and civil penalties to cease the crypto asset staking program.
Regarding the staking program, which is now shut down, Santori noted that staking was a small percentage of Kraken’s revenue. “It does, of course, affect pretty dramatically our product mix in the U.S.,” said Santori.
The executive claimed that the SEC’s accomplishment in making the exchange shutdown its staking program will only push American customers who want staking services offshore to riskier exchanges. Santori concluded:
It’s really indicative of a pretty unfortunate situation here stateside. We’ve got a regulatory environment that is essentially forcing users off to use offshore exchanges that will gladly accept their business with so little as a VPN.
Meanwhile, the crypto market hasn’t reacted significantly to Kraken’s announcement of the upcoming crypto bank. The global cryptocurrency market capitalization has continued in a downtrend, down by nearly 1% in the last 24 hours, with a value of $1.073 trillion.