In a recent [podcast episode](https://open.spotify.com/episode/2iBhhDShX30sfdKOiU2agw) of The Scoop, The Block's Frank Chaparro and Kraken Chief Legal Officer Marco Santori discussed the crypto exchange's plan to launch a bank.

Kraken's ultimate goal is to support other crypto companies finding it difficult to establish a relationship with banks.

## US banks hesitant to accept crypto firms as new clients

Given increased crypto regulatory actions in the US, banks are hesitant about taking on cryptocurrency firms as new clients. The US Securities and Exchange Commission (SEC), led by Chair Gary Gensler, believes that most crypto assets offered by cryptocurrency companies are securities, thereby [subject to regulation.](/news/article/sec-probe-giving-advice-for-crypto-trading)

Following the unceremonious decline of major industry [players such as FTX](/news/article/ftx-funds-political-donations-to-be-recovered) and BlockFi, the SEC has put the US-based segment of the industry under the microscope. Following a [reported SEC probe of the Kraken](/news/article/crypto-exchange-kraken-faces-sec-probe) crypto exchange over unregistered securities, the cryptocurrency trading platform agreed to pay a $30M fine.

This resulted in the Kraken [suspending its staking operations](/news/article/crypto-tumbles-as-kraken-suspends-staking) with retail investors. This decision by the SEC did not go well with the community, investors, and even politicians.

That said, there is a silver lining for Kraken, and it is in the form of a [recent incident involving Silvergate](/news/article/silvergate-bank-crisis-sees-crypto-tank). In early March 2023, Silvergate 'missed' the deadline for 10K filings. This led the SEC to warn the bank about its capacity to carry on as a "going concern".

As a result, Ledger, Circle, Paxos Trust Company, Coinbase, and several other high-end industry clients publicly cut ties with the cryptocurrency bank. This led Kraken crypto exchange to decide to launch its own bank and support cryptocurrency firms.
 
Scrolling to the bottom of Kraken's [website](https://www.kraken.com/bank), you will see the Kraken Bank option. The facility has yet to be launched, but you can sign up for updates by filling out a short form.

According to the website, Kraken is "planning a phased launch in 2022". This may be a typing error, or the webpage needs to be updated with the latest content. It should be noted that the trading platform is the first cryptocurrency firm to be handed a US state banking charter.

Operating as an independent affiliate of the Kraken network of products, the “[Bitcoin bank](/news/article/crypto-banks-access)" will be based out of Wyoming, with a forward-facing regulatory framework. Good news may follow later this year.


Kraken Crypto Exchange Plans Bank Launch 

Tumbles in crypto values have followed the decision of cryptocurrency exchange Kraken to suspend staking.

On 9 February, major coins were in the red, causing a drop in the cryptocurrency market capitalization by 5.45% to $1.02 trillion. Bitcoin fell below $22,000, while Ethereum dropped to $1,549. Doge went down by 10.07% at $0.081.

Meanwhile, US stocks took a hit and erased previous gains, as concerns about potential decisions from the Federal Reserve overshadowed positive reactions to the latest round of corporate earnings reports. The S&P 500 saw a decline of 0.9% and closed at 4,081.50, while the Nasdaq Composite Index experienced a drop of 1.02% and fell at 11,789.58.

[Kraken](/news/article/crypto-exchange-kraken-faces-sec-probe) made a settlement with the US Securities and Exchange Commission. As part of the settlement, Kraken agreed to suspend its cryptocurrency staking operations and immediately discontinue its crypto staking-as-a-service platform for US customers. The [SEC](/news/article/sec-probe-giving-advice-for-crypto-trading) charged Kraken for offering unregistered securities and has asked it to pay a $30 million penalty.

## Investors witnessed [crypto tumbles](https://www.benzinga.com/markets/cryptocurrency/23/02/30850294/over-200m-long-crypto-positions-wiped-out-as-bitcoin-ethereum-dogecoin-drop?SNAPI) across markets in the aftermath of the Kraken suspending staking operations

Almost $200 million worth of long and short crypto was liquidated in the past 24 hours. More than 43% of liquidations worth $100M took place on Binance. Of the total liquidations, $53M worth of BTC was liquidated, ETH liquidation stood at $52M, and Doge liquidation totalled around $5M.

## Crypto analyst advice to traders after crypto tumbles

Crypto analyst Rekt Capital has sounded the alarm on [Bitcoin's](/news/article/jim-cramer-says-ignore-bitcoin-hype) impending losses. According to the analyst, the BTC must close above $22,692 to maintain its technical uptrend.

The analyst has cautioned traders about the dangers of making trades based on "fear of missing out" (FOMO) and instead suggests, "if you must FOMO, choose a red day".

Another crypto analyst, Kaleo, views the recent retest of the high-timeframe trend breakout as a supportive factor for Bitcoin. Kaleo believes that the market has yet to experience a significant breakout, which presents an opportunity for investors to accumulate more BTC. Although it may take some time, Kaleo believes that the $30,000 level remains a target for the cryptocurrency.


red image of kraken logo and Ethereum, Dogecoin and Bitcoin tokens falling

Crypto Tumbles as Kraken Suspends Staking

According to a [Bloomberg report](https://www.bloomberg.com/news/articles/2023-02-08/cryptocurrency-exchange-kraken-faces-probe-by-sec-over-unregistered-securities) published on 8 February, [renowned crypto exchange Kraken](/news/article/kraken-review) faces a probe by the US SEC (Securities and Exchange Commission) over unregistered securities.

[The probe is related to](/news/article/sec-probe-giving-advice-for-crypto-trading) some offerings the cryptocurrency exchange has made to US clients. According to someone familiar with the investigation who wishes to remain unidentified, proceedings are currently at an advanced stage and settlement could come in the following days.

It is currently unclear which offerings or tokens are under the microscope.

Moni Talks reached out to the SEC for further comments on the probe, but, as is the norm, the SEC does not comment on the status of a 'potentially existing' investigation.

## What does the probe mean for crypto exchange Kraken and the industry?

At the time of writing, we are unsure of the magnitude of the investigation. That said, if Kraken is guilty of breaching securities laws, the ramifications for the cryptocurrency exchange and the industry at large could be significant, especially after the FTX saga of Q4 2022.

If Kraken settles with the SEC, this could pressure other cryptocurrency firms to discuss deals with the agency. In December 2022, SEC Chair Gary Gensler commented on the runway for crypto firms to register with the regulator getting shorter.

The SEC is firm with its stance - most of the tokens offered by crypto firms are securities and should be subject to the rules of the regulator. It should be noted that all SEC investigations DO NOT lead to enforcement action. Instead, individuals or firms may have to pay a fine and/or face other penalties.

![kraken.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/kraken_677edbef91.png)
 
Source: [CoinMarketCap](https://coinmarketcap.com/exchanges/kraken/)

With a [trading volume of nearly $640M](https://coinmarketcap.com/exchanges/kraken/) at the time of writing, US-based Kraken is the third-largest cryptocurrency exchange. This statistic alone indicates that any potential legal ramifications on the cryptocurrency trading platform could have a telling impact on the industry.

This is not the first probe Kraken has faced. In 2022, Kraken paid a fine of more than $360,000 and invested $100,000 in sanctions compliance over allegations that the cryptocurrency trading platform [violated US sanctions against Iran](/news/article/kraken-exchange-under-investigation). The settlement was reached with the US Treasury’s Office of Foreign Assets Control (OFAC).

Global crypto regulations will come into effect soon, whether you like it or not, and several countries are actively working towards this.


Crypto Exchange Kraken Faces US SEC Probe 

This Kraken review will zero in on margin trading with the US-based cryptocurrency exchange.

[Margin trading](https://cryptopotato.com/kraken-margin-trading-beginners-guide-everything-you-need-to-know/) allows customers to leverage their bets using funds they do not own. The advantage of this trading strategy is that it can significantly improve profits while putting less money at risk.

However, it is also worth mentioning that it has the potential to amplify losses rapidly. Leveraged trading enables investors to open more leveraged positions than their current balance. Kraken advances funds over what the investor currently has in their account.

To start a margin account, the user's broker is legally obligated to acquire their permission. The margin account may be included in the usual account opening agreement or it may be a separate agreement.

Margin trading is also more versatile than other sorts of lending. There may be no set repayment timeline, and the user's broker's maintenance margin requirements may be straightforward or automated. Most margin accounts are open until the securities are sold. At this point, final payments are often due to the borrower.

## Kraken review: How margin trading works

To margin trade on [Kraken](https://www.kraken.com/en-gb/features/margin-trading), users must go through several order types based on where they believe the market will move. The buyer can open long or short trades and close them using opposite orders or settling commands.

## Kraken review: What cryptocurrencies can users trade

One detail that needs to be known is which cryptocurrencies [Kraken](https://r.kraken.com/4e7yWG) supports for margin trading and the leverage levels at which customers will be allowed to deal. 

Kraken offers varying amounts of leverage depending on the cryptocurrency the investor wants to trade.

As a result, the allowable leverage varies depending on the base and quoted currencies. The following table lists all of the cryptocurrencies currently accessible for this type of trading and the leverage levels that are available for each one:

[![Kraken1.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/Kraken1_0ef841b41d.png)](https://www.kraken.com/features/margin-trading)
  
## Kraken Review: How to open a margin position

When a user opens a position, they receive advance cash (the margin) to assist them in executing a leveraged trade. 

In general, positions can be opened in two ways, depending on whether the investor wants to go long or short. 

If users want to open a long trade for ETH/EUR, the Kraken exchange will advance EUR to buy ETH. 

If the customer wants to open short trade, they will advance ETH so that the user can sell it for EUR. 

To enable margin trading, the user must log into the account, navigate to the "New Order" page, and select "Intermediate." 
 
[![Kraken2.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/Kraken2_bc3aa130fc.png)](https://www.kraken.com/features/margin-trading)

[![Kraken3.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/Kraken3_24e15de6a4.png)](https://r.kraken.com/4e7yWG)
  
The above screenshot illustrates that the [user](/news/article/kraken-exchange-under-investigation) can purchase or sell using the specified leverage on the right. For example, if the consumer selects to employ a leverage amount of 3, which is 3:1, tripling their purchasing power. 

If the user wants to go long, they must first place a buy order, as described above. 

The user must next configure the Order Type. If they choose the market, they must select "market" from the two options. If they wish to execute the deal when the price reaches a specified limit, they must select "limit".

## Kraken review: How to close a position

As previously stated, when users use leveraged margin positions, trades are conducted with an advance funded by [Kraken](/news/article/kraken-ceo). 

Users must return all the monies advanced to the exchange to close a trade. To close a trade, the user must create an order inverse of the opened order they wish to complete.

[![Kraken4.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/Kraken4_375fee55f5.png)](https://r.kraken.com/4e7yWG)
 
There is a long open position for Bitcoin in the previous screenshot. It indicates that the order type is "buy/market," indicating that the position is long. It selects the best available market order rather than aiming for a specific price limit on the order book. 

The investor would have to create the opposite transaction to close that position. 
 
[![Kraken5.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/Kraken5_2d9039dc05.png)](https://r.kraken.com/4e7yWG)

Since the position that needs to be closed is a "Buy," the user must select the "Sell" option on this screen. They also must choose leverage; otherwise, their funds will be sold at the best market price. 

After picking leverage, all the user has to do is click the Sell XBT for EUR button, and the trade will be closed, adding or discounting their balance with the profit or loss made on that transaction.

## Kraken review: How to settle a position 

Margin trading, as previously stated, is carried out through Kraken advances. As previously mentioned, one method for closing positions is to execute an opposite transaction. 

The second method is for the trader to return the advanced funds immediately from his account without engaging in a trade, known as a position settlement. 

For example, here's what you need to do to settle a long position. 
 
[![Kraken6.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/Kraken6_d124eb7445.png)](https://r.kraken.com/4e7yWG)

The user must pick the advanced option from the top menu to generate a Buy settle position order.

The user then chooses the amount to settle and the level of leverage. The order type should be "Settle Position".

The number of cryptocurrencies settled will be purchased using the chosen currency from the user's account at the price at which the position opened.

## Kraken Review: Types of fees

Regarding margin trading on Kraken, the user must be aware of two types of costs. These are the "opening fees" for creating a new position and the "rollover fees" for keeping an existing position open.

Both depend on the base and quote currencies. The initial cost ranges between 0.01% and 0.02%. 

The rollover cost, on the other hand, is payable every four hours and varies depending on the cryptocurrency trading pair selected by the customer. It ranges from 0.01% to 0.02% every four hours.

Margin trading on Kraken can be advantageous, allowing users to increase their profits if the right trade occurs. The platform has several advantages, but users must also note that losses might multiply.

It's vital to remember that [margin trading](https://www.investopedia.com/terms/m/margin.asp) is considered high-risk, with significant losses possible if the trade doesn't go as planned. As a result, it's critical to recognise the risks of this form of trading and act cautiously.


Kraken Review: All You Need to Know

Jesse Powell, the outspoken and frequently controversial co-founder of the Kraken cryptocurrency exchange, announced [his resignation](https://fortune.com/crypto/2022/09/21/krakens-powell-steps-down-incoming-ceo-says-culture-will-not-change/) as Kraken CEO to devote more time to the company's products and broader industry advocacy.

Powell will be succeeded as chairman of the board by Chief Operating Officer Dave Ripley. Once a new COO is selected, the transition is expected over the next few months.

Powell has been a prominent player in the crypto scene since Bitcoin's inception. He has played a significant role in growing the company from a new startup to a significant exchange with a reputation for innovative products.

Kraken CEO Powell, though a prominent figure in crypto circles, has also become controversial due to his unconventional views on diversity, abortion, and vaccines.

Powell, the company's largest shareholder and chairman conducted a thorough CEO search and interviewed more than a dozen applicants before selecting Ripley.

Ripley, who plans to fully take charge of the senior role once Kraken finds a new COO, says he enjoys managing large teams and expects little to change in the company's culture.

## Shrinking company share

[Kraken](/news/article/kraken-exchange-under-investigation) has grown to be one of the largest US crypto exchanges over the years, ranking fourth among global spot exchanges as of Wednesday, according to CoinMarketCap data. Nonetheless, the current "crypto winter" has impacted the industry. According to data provider CryptoCompare, Kraken's global market share among the top 15 exchanges has dropped by about 32% since the beginning of the year.

Kraken, a remote-first company, closed its San Francisco headquarters this year. The company employs over 3,300 people worldwide.

Kraken had plans to go public, backed by significant crypto venture capital firms such as Tribe Capital and Electric Capital. Last year, the company was in talks to raise funds at a more than $10 billion valuation. Powell said the company is preparing to go public, but he couldn't give a specific timeline for when that would happen. Ripley added that the organisation currently has no active fundraising plans.

The Commodity Futures Trading Commission fined the company $1.25 million last year for offering illegal crypto margin products to US residents.


Kraken CEO steps down, succeeded by Dave Ripley

Kraken exchange, one of the world's largest cryptocurrency exchanges, is under federal investigation for allegedly breaching United States sanctions by enabling customers in Iran and beyond to purchase and sell digital tokens.

Kraken, an $11 billion private entity that allows customers to purchase, trade, or hold multiple cryptocurrencies, has previously faced [regulatory action](/news/article/us-sec-regulation). The Commodity Futures Trading Commission fined the corporation $1.25 million last year for unlawful trading services. 

The cryptocurrency firm would be the largest US crypto business to face OFAC enforcement action. Sanctions on Iran, enacted by the US in 1979, ban the export of goods or services to people or companies in the country.

As the market for digital currencies has risen, the federal government has progressively clamped down on crypto firms. Tether, a stablecoin corporation, was penalised by the CFTC last year for false representations regarding its reserves. Simultaneously, the Justice Department charged an ex-employee of Coinbase, the largest cryptocurrency exchange in the US, with [insider trading](https://www.bloomberg.com/news/articles/2022-07-21/ex-coinbase-manager-arrested-in-us-crypto-insider-trading-case) earlier this month.

## Lawsuit Accused Business in 2019

The Kraken exchange and the subject of sanctions came up in a November 2019 lawsuit filed by a former finance department employee who accused the business of earning money from accounts in sanctioned nations.

Jesse Powell, Kraken's exchange CEO, allegedly stated that he would contemplate breaching the law in various instances if the benefits to the firm exceeded the possible fines. 

However, it is believed Powell stated that the Kraken exchange regularly checks compliance with sanctions laws and, as a general rule, communicates to regulators even possible problems.  

That same year, OFAC began looking into the Kraken exchange, concentrating on the company's accounts in Iran. Sources alleged Kraken users had also created accounts in Syria and Cuba.

A lawyer from a renowned law firm that handles crypto regulations believes that as crypto moves without a bank or intermediaries, exchanges are liable for certain forms of financial regulatory compliance.




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