Cryptocurrency exchange Kraken announced that it would stop margin trading services for U.S. traders who fail to register with new KYC rules. The crypto exchange published a blog post stating that, from June 23, users who have only verified up until the starter tier will not be able to use margin trading. Those in the intermediate tier or above and international users will still be able to use the service.
Kraken tightens KYC rules.
The change comes as regulators in North America, including Canada, are cracking down on exchanges for failure to meet compliance standards. Crypto exchange BitMEX, in one of the most high-profile cases, is facing a major lawsuit from the U.S. Commodity Futures Trading Commission (CFTC) and the Department of Justice (DOJ) for a range of allegations, including not implementing KYC rules. Other crypto exchanges made a note of the actions taken against BitMEX and subsequently doubled down on their KYC requirements. Financial regulators have argued that without KYC/AML processes and registration, the platforms are liable to be used for illicit activities and affect investors’ financial safety.
Regulators worldwide express concern over crypto regulations.
Kraken noted in the blog post that the changes are being made “in light of regulatory guidance about leveraged digital asset transactions.” The U.S. is now particularly active in regulating cryptocurrency. Authorities at the highest level of government are now broaching the subject of cryptocurrency regulation. Some ask for regulation that allows for some innovation, while others are direr in their statements. Regulators worldwide are stepping up to regulate cryptocurrencies as the market further entrenches itself in the mainstream. South Korea has also laid out a series of regulations for exchanges, following which they will be granted a fully regulated status.