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Kraken Fights IRS Over Customer Information

by Blockchain NewsApril 27, 2023

Kraken, the popular crypto exchange, is contesting the United States Internal Revenue Service’s (IRS) demand for critical exchange user information, citing it as an “unjustified treasure hunt.” According to Bloomberg, the crypto exchange has requested federal court intervention in San Francisco to ask the IRS to back off from its demand for customer information.

Kraken’s pushback against the IRS comes in response to the agency’s February summons, which demanded additional user information to identify Kraken accounts that did at least $20,000 of cryptocurrency trading in any single year between 2016 and 2020. The exchange claims that the IRS has gone “far beyond” its intrusive summons, and its demands for customer information are not justified.

Kraken’s request for federal court intervention cited Coinbase’s case from 2017, where the tax agency scaled back its initial demand after Coinbase’s continuous refusal. In the Coinbase case, U.S. District Judge Jacqueline Scott Corley decided that the summons sent to more than 14,000 customers of the exchange wasn’t too intrusive because the IRS had a valid reason to look into taxpayers who might not be disclosing their Bitcoin (BTC) gains.

Kraken’s lawyers claimed that the IRS has gone “far beyond” the rules set by Judge Corley in the Coinbase case. Kraken joined Coinbase in its efforts to push back against growing regulatory scrutiny by American regulators. Coinbase is currently fighting its own battle against the U.S. Securities and Exchange Commission (SEC) over offering crypto staking services.

The SEC alleged that staking services offered by Kraken, Coinbase, and other platforms violate securities law. While Coinbase settled with the SEC for $30 million for offering staking services, it has decided to head to court for its IRS battle.

The growing regulatory scrutiny has become a growing concern for crypto companies in the U.S. The likes of Coinbase CEO Brian Armstong and USD Coin issuer Circle CEO Jeramy Allaire have warned that the growing pushback from regulatory bodies will force budding crypto companies to move offshore.

In conclusion, Kraken is fighting against the IRS’s demand for customer information, citing it as an “unjustified treasure hunt.” The exchange has requested federal court intervention, pointing out that the IRS has gone “far beyond” its intrusive summons. With growing regulatory scrutiny, Kraken and Coinbase’s pushback against American regulators could become a growing trend in the crypto industry, with more companies moving offshore to avoid regulatory barriers.

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Kraken Irish Subsidiary Awarded VASP Authorization by Central Bank of Ireland

by Blockchain NewsApril 20, 2023

Kraken, one of the world’s leading cryptocurrency exchanges, has received some exciting news from its Irish subsidiary, Payward Europe Solutions. On April 18th, the Central Bank of Ireland awarded the company virtual asset service provider (VASP) authorization, making it only the third cryptocurrency outlet to be registered in the European Union (EU).

This authorization comes at a critical time for Kraken and other companies operating in the EU’s cryptocurrency market. The EU is set to conduct its final vote on the Markets in Crypto Assets (MiCA) regulation, which has been highly anticipated in the industry. The preliminary voting for the MiCA legislation showed overwhelming bipartisan support, indicating that it is likely to pass.

If the MiCA regulation is approved, it will require any company operating as a crypto assets service provider (CASP) in the EU to register with one of the union’s 27 authorized regulators. This means that any company that provides services like custody, exchange, or issuance of cryptocurrencies will have to be authorized by the EU regulators.

Kraken has positioned itself well by obtaining the VASP authorization for its Irish subsidiary Payward Europe Solutions. The company joins the ranks of other registered cryptocurrency outlets like Gemini and Coinbase. Gemini received its VASP authorization in July 2022, while Coinbase received its authorization in December of the same year.

Kraken has been one of the most successful cryptocurrency exchanges in the world since its inception in 2011. The company has a strong track record of providing reliable and secure trading services to its users. In recent years, Kraken has expanded its services to different parts of the world, with subsidiaries operating in different countries.

Payward Europe Solutions, which is registered in Dublin, Ireland, is one of Kraken’s most important subsidiaries. The company offers trading services for different cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. With the VASP authorization, the company is now authorized to provide these services in compliance with the EU’s regulatory requirements.

The MiCA regulation is expected to bring significant changes to the cryptocurrency market in the EU. It will improve investor protection by setting high standards for cryptocurrency service providers. The regulation will also create a level playing field for all players in the industry, as it will apply to all companies that provide crypto services.

Overall, Kraken’s VASP authorization for its Irish subsidiary Payward Europe Solutions is a significant milestone for the company. The authorization shows that Kraken is committed to complying with the EU’s regulatory requirements and providing top-notch services to its users. It also positions the company well in the highly competitive EU cryptocurrency market.

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Tagged : CENTRAL BANK OF IRELAND / Kraken / MICA REGULATION / News / PAYWARD EUROPE SOLUTIONS / VASP AUTHORIZATION

Kraken Halts ACH Deposits and Withdrawals via Silvergate

by Blockchain NewsMarch 23, 2023

In a move that has disrupted the cryptocurrency industry, Kraken, one of the world’s largest cryptocurrency exchanges, has announced that it will no longer support ACH deposits and withdrawals via Silvergate, citing difficulties with the automated clearing house. According to reports, Kraken sent an email notice to its users on March 22, notifying them that ACH deposits and withdrawals would no longer be available from March 27.

Kraken has assured its users that no other services would be affected by this change, including ACH instant purchases via Online Banking. The exchange has also advised its users to use alternative funding options, such as MVB Bank for Fedwire deposits and withdrawals, and other instant purchase options, to ensure an uninterrupted funding experience.

Kraken has joined the growing list of cryptocurrency exchanges that have halted their ACH deposits and withdrawals via Silvergate. The Winklevoss brothers-founded exchange, Gemini, also stopped accepting customer deposits and processing withdrawals through Silvergate ACH and wire transfers on March 2.

Silvergate is one of the crypto-friendly U.S. banks that collapsed in early March, alongside other lenders like Silicon Valley Bank, posing major challenges for the cryptocurrency industry. Many cryptocurrency firms hold significant exposure to these banks, which has led to disruptions in the cryptocurrency market.

Kraken joined the Silvergate Exchange Network in 2019, which allowed the exchange to offer deposits and withdrawals in U.S. dollars from Silvergate accounts. Kraken has assured its users that its team is working to make ACH funding available again as soon as possible.

Kraken is a cryptocurrency exchange founded in 2011 by Jesse Powell, who is currently the CEO. The exchange is based in San Francisco, California, and is one of the largest cryptocurrency exchanges in the world, trading over $1 billion daily, according to data from CoinGecko.

Silvergate is a U.S.-based bank that is known for its cryptocurrency-friendly policies. The bank is based in La Jolla, California, and was founded in 1988. In 2019, Silvergate launched the Silvergate Exchange Network, which allows cryptocurrency exchanges to offer deposits and withdrawals in U.S. dollars from Silvergate accounts.

Automated clearing house (ACH) is an electronic funds transfer system that allows businesses and consumers to send and receive payments electronically. ACH transfers are commonly used for direct deposit, payroll, and bill payments. ACH transfers are typically slower than wire transfers but are more cost-effective.

The cryptocurrency industry has faced significant challenges in recent years due to the lack of regulatory clarity and the volatile nature of cryptocurrencies. The industry has also faced challenges with banking relationships, as many traditional banks are hesitant to work with cryptocurrency firms due to concerns over money laundering and fraud. As a result, many cryptocurrency firms have turned to banks like Silvergate, which have more favorable policies towards cryptocurrencies.

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Tagged : Ach / Cryptocurrency / Deposits / Kraken / News / Silvergate / Withdrawals

What the U.S. Congress Decides on Crypto Will Ultimately Overstepping their authority

by Blockchain NewsFebruary 16, 2023

The policy expert for the cryptocurrency advocacy group Blockchain Association says that despite attempts to police cryptocurrency through enforcement actions, United States financial regulators “are bound by legal reality,” and Congress will ultimately decide what regulations should be put in place for cryptocurrencies.

Jake Chervinsky, the chief policy officer of the organization, contributed his thoughts to a lengthy Twitter conversation on the topic of the current status of crypto policy on February 14.

He made the observation that the Securities and Exchange Commission as well as the Commodity Futures Trading Commission “do not have the ability to completely oversee cryptocurrency.”

Given the ideological divide that exists between the House Republicans and Senate Democrats, Chervinsky is of the opinion that a compromise on the crypto legislation is “unlikely.” He said that the Securities and Exchange Commission and the Commodity Futures Trading Commission had exceeded their powers in an effort to “get things done” without Congress.

Chervinsky issued a plea for the sector to maintain its composure in the wake of the recent flurry of action from the SEC, which he referred to as “crypto’s biggest opponent.” As an example, Chervinsky cited the SEC’s crackdown on staking services.

The settlement that the SEC reached with the cryptocurrency exchange Kraken on February 9, which forbade Kraken from ever selling staking services to consumers in the United States, has been publicly criticized by SEC Commissioner Hester Peirce.

Peirce expressed his disagreement with the majority opinion in a statement dated February 9, in which he said that regulating a growing business via enforcement “is neither an effective or equitable manner of governing” the industry.

It was proposed by Chervinsky that litigation is one method the cryptocurrency business may press for appropriate legislation. Chervinsky said that the court plays a key role in influencing policy that has been “ignored.”

Coinbase, a cryptocurrency exchange, is also the subject of an SEC investigation that is similar to the one that led to Kraken’s settlement.

A more stronger position has been adopted by Coinbase CEO and co-founder Brian Armstrong, who believes that it would be disastrous for the United States to do away with staking for cryptocurrencies.

In a tweet dated February 12, Armstrong contended that Coinbase’s staking services are not securities and said that he would “gladly defend this in court if it were necessary.”

The decisions that judges make in important cases establish new standards in the law. If such a case were to be taken before a court and the judge concluded that Coinbase’s staking services did not qualify as securities, then other cryptocurrency businesses who are in a situation comparable to Coinbase’s may utilize the precedent as part of their defense.

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Tagged : Brain Armstrong / Cftc / Coinbase / Congress / Court / Cryptocurrency Exchange / Kraken / News / Regulation / SEC / Staking / Twitter

Coinbase Executives Stand Up for Crypto Staking Services

by Blockchain NewsFebruary 13, 2023

Trade in cryptocurrencies Executives at Coinbase are defending the company’s cryptocurrency staking services, arguing that they cannot be categorized as a security and threatening to take the subject to court in the United States.

The Chief Executive Officer of Coinbase, Brian Armstrong, said on Twitter that the business is prepared to “fight this in court if necessary.” The decision to take this action comes after the cryptocurrency exchange Kraken came to a deal with the Securities and Exchange Commission on February 10 to cease providing staking services or programs to customers in the United States.

According to the Securities and Exchange Commission (SEC), Kraken did not “register the offer and sale of its crypto asset staking-as-a-service program,” which the SEC has determined to be a security. Kraken has agreed to pay $30 million in disgorgement, prejudgment interest, and civil penalties, in addition to ceasing its services, as part of the settlement.

In a recent blog post, Coinbase’s chief legal officer, Paul Grewal, expressed his opinion on the matter. He said that “staking is neither a security under the US Securities Act, nor under the Howey test.” Grewal continued by saying, “Trying to superimpose securities law onto a process like staking does not help consumers in any way, and instead imposes unnecessarily aggressive mandates that will prevent US consumers from accessing basic cryptocurrency services and push users to offshore, unregulated platforms.”

Grewal contends that staking does not satisfy the requirements of the Howey test, which need a commitment of money, participation in a common venture, a reasonable expectation of rewards, and the assistance of other people. According to what he stated, “The Howey test originates from a 1946 Supreme Court decision — and there is a different conversation to be conducted about whether or not that test makes sense for current commodities like crypto.”

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Tagged : Brain Armstrong / Business / Coinbase / Kraken / News / Regulation / SEC / Staking

SEC Chair Gary Gensler Warns Crypto Companies

by Blockchain NewsFebruary 11, 2023

After the United States Securities and Exchange Commission revealed that it had reached a settlement with the cryptocurrency exchange Kraken, the chair of the SEC, Gary Gensler, issued a warning to crypto businesses, urging them to “come in and respect the law.”

During an appearance on CNBC’s Squawk Box on February 10, 2018, Gensler said that cryptocurrency exchanges should register with the SEC in order to be in compliance with rules in the United States. He claimed that many participants in the business were “choosing” not to do so. The head of the Securities and Exchange Commission (SEC) said that the business models of many cryptocurrency projects were “rife with conflict,” and that these projects needed to “disentangle” their bundled goods.

According to Gensler, “time-tested norms and laws to safeguard the investing public” are necessary for the industry to have any hope of surviving and thriving in the future. “Don’t put your hand in the customer’s wallet by utilizing their money for your own platform,” the sales pitch advised.

After the SEC announced that it had reached a settlement with Kraken, Gensler made his statement. As part of the settlement, Kraken agreed to pay $30 million in disgorgement, prejudgment interest, and civil penalties. Additionally, the exchange agreed to cease offering its staking services and programs to customers in the United States. Kraken said that it will keep providing staking services for customers located outside of the United States via a different business.

There has been a lot of backlash to the settlement that the SEC reached because many people see it as regulators taking action against companies that need to navigate a regulatory landscape that does not have clear standards. Hester Peirce, a commissioner for the SEC, said that the staking program had “served individuals well” and that the SEC’s actions might be described as “lazy and patronizing.”

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Tagged : Kraken / News / Regulation / SEC / Staking / United States

Kraken Agrees to Cease Staking Services for U.S. Clients

by Blockchain NewsFebruary 11, 2023

The United States Securities and Exchange Commission and the cryptocurrency exchange Kraken have come to an agreement that will result in Kraken no longer providing staking services or programs to customers located in the United States.

The Securities and Exchange Commission (SEC) stated in a press release dated February 9 that it had filed charges against Kraken for “failing to register the offer and sale of their crypto asset staking-as-a-service program.” According to the SEC, these programs qualify as securities and fall under its jurisdiction. The cryptocurrency company has come to an agreement wherein it will pay $30 million in disgorgement, prejudgment interest, and civil penalties, and will also stop offering its staking service to consumers in the United States.

“Kraken not only offered investors outsized returns untethered to any economic realities, but it also retained the right to pay them no returns at all,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “Kraken offered investors outsized returns untethered to any economic realities.” “During this whole time, it gave them no insight whatsoever into, among other things, its financial status or whether or not it even had the wherewithal to pay the promoted returns in the first place,”

According to the complaint filed by the SEC, Kraken has been promoting its cryptocurrency staking services as a “easy-to-use platform and advantages that arise from Kraken’s efforts on behalf of investors” since 2019 when it began selling such services to consumers in the United States. However, according to the commission’s allegations, Kraken customers essentially lost ownership of their tokens when they offered them to the staking program. This exposed them to further risk and provided “very little security” for their investments.

In a blog post dated February 9, Kraken said that it will continue to provide staking services for customers located outside of the United States via a different business.

After authorities from the Internal Revenue Service petitioned the U.S. District Court for the Northern District of California to enable it to issue summonses trying to gather information on Kraken users, the Securities and Exchange Commission reached a settlement with the company and announced it. The document that was filed in court on February 3 states that Kraken did not answer to a similar summons that was given in May 2021.

In the lawsuit that took place in 2021, the cryptocurrency exchange had been asked to produce information on individuals who had carried out the digital currency equivalent of $20,000 in transactions over the course of a single year between 2016 and 2020. Officials from the United States said that Kraken “failed to comply with the summons” and did not deliver the “books, documents, papers, and other material” that were demanded of them.

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Tagged : Kraken / News / Regulation / SEC / Staking / United States

Kraken Closes Abu Dhabi Office

by Blockchain NewsFebruary 2, 2023

A cryptocurrency exchange known as Kraken has decided to close its headquarters in Abu Dhabi less than a year after receiving approval from local authorities to do business there.

According to an article that was published by Bloomberg on February 2, it was announced that Kraken had shuttered its office in Abu Dhabi, which resulted in the dismissal of around eight members of the team that specialised in the Middle East and North Africa (MENA). Since April 2022, when the licence to operate in the Abu Dhabi international financial hub and the Abu Dhabi Global Market was granted, the exchange has been permitted to perform services there. This occurred before the market drop that caused a lot of crypto firms to suffer losses.

The rumoured move in the Middle East occurred after Kraken said in November that it planned to downsize its workforce by more than 30 percent, which is equivalent to more than 1,000 people, in an effort to survive the crypto winter. According to Kraken co-founder Jesse Powell, the layoffs are returning the size of the exchange back to where it was in 2021, before it witnessed considerable growth. Powell came to the conclusion that he should step aside from his post as CEO, but he will continue to serve as board chair, as he indicated back in September.

As of the 31st of January, Kraken withdrew entirely from the Japanese market. This is the second time since April 2018 that the exchange has abandoned a major economy in Asia. The firm said in December that the decision had been reached as part of the process of resource allocation, citing “current market conditions in Japan” and a “weak crypto market globally” as the reasons for the move.

This page was revised on February 2 to reflect a statement that was issued by Kraken. The revision can be seen here.

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Tagged : Business / Cryptocurrency Exchange / Kraken / Middle East / News

Coinbase Leaves Japan After Trade Collapse

by Blockchain NewsJanuary 18, 2023

Even if Bitcoin’s price has returned to where it was before the FTX crash, the sector is still being negatively affected by the contagion, which has forced the cryptocurrency exchange Coinbase to cease operations in Japan.

Due to the current state of the market, Coinbase made the decision on January 18 to publicly declare that the company would be closing its offices in Japan and conducting an in-depth analysis of its operations in the nation. By the 16th of February, all Coinbase Japan clients will have about one month to remove any fiat currency or cryptocurrency assets from the site.

After the 17th of February, any cryptocurrency assets that are still being held by clients of Coinbase Japan will be immediately converted to the Japanese yen (JPY).After the 20th of January, deposits in fiat money will no longer be possible.

The outlined the principles that customers would have the ability to transfer their assets to any other virtual asset service provider, a self-custodial wallet, or the Coinbase Wallet if they so want. Customers also have the option to liquidate their portfolios and transfer their assets to a bank account in their home country.

Coinbase emphasized that the platform is dedicated to make the service termination as seamless as possible, guaranteeing consumers that all users will be able to withdraw their funds at the earliest feasible convenience.

According to prior reports, Coinbase began the planning stages for its entrance into Japan in the midst of 2018’s weak market. Coinbase is the latest major cryptocurrency exchange to pull out of Japan, following in the footsteps of Kraken, which made the same decision in late 2022 to end its business activities in the nation.

The exchange said that it experienced comparable issues in Japan, noting the country’s underdeveloped cryptocurrency sector.

Kraken and Coinbase have both dramatically cut the size of their workforces, with Kraken terminating the employment of thirty percent of its workforce not long after the failure of the FTX exchange in November. Coinbase, which had already trimmed its personnel by 18% in the previous year, stated in January that it would be cutting a further 20% of its employees.

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Tagged : Coinbase Japan / Crypto / JPY / Kraken / News

Kraken Leaves Japan Again, Citing A Poor Crypto Market.

by Blockchain NewsDecember 28, 2022

Kraken, a global cryptocurrency exchange, has made the decision to suspend its operations in Japan for a second time. The company cites a strain on its resources as the primary motivating factor for this decision.

In a blog post published on December 28, Kraken announced that it had made the decision to deregister from the Financial Services Agency and end its operations in Japan by January 31, 2023. The company explained that this decision was made as part of an effort to prioritize its resources and investments.

Payward Asia Inc., Kraken’s wholly owned subsidiary, is in charge of the operation of the exchange that caters to Japanese customers.

The same subsidiary firm worked in Japan from 2014 until 2018, when it decided to stop doing business there so that it could concentrate its efforts and resources more effectively on expanding into other regions of the world.

This subsidiary made the decision to relaunch in October of 2020, establishing its headquarters in Tokyo and initiating spot trading on five main assets, with future expansion plans in mind.

The second iteration of this process has now been completed, and Kraken has committed to ensuring that all impacted customers will have the opportunity to remove their cash from the exchange by the 31st of January, at the very latest.All activities pertaining to trading will continue to operate normally, despite the fact that deposits will be banned.

In January, withdrawal limitations will be lifted, and a procedure that will enable users to reclaim their staked Ether will also be implemented. More information about this process will be made public in the near future.

In recent weeks, it would seem that Kraken’s primary objective has been to reduce its operating expenses.

In response to challenging market circumstances, Kraken said on November 30 that it has undertaken one of its “hardest choices” by deciding to reduce the number of employees it employs throughout the world by around 1,100 individuals, which is comparable to thirty percent of its total staff.

The exchange said that decreased trading volumes and fewer customer sign-ups led to Kraken’s decision to cut down on expenditures, and that the adjustments were required to support the company for the long-term.

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Tagged : Kraken / News / QUITS / WEAK CRYPTO MARKET