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The Wyoming Banking Board approved San Francisco-based crypto exchange Kraken's application for a special purpose depository institution (SPDI) charter. Kraken is now the first SPDI bank in Wyoming. Kraken will also be the first newly chartered (de novo) bank in the state since 2006. By becoming a bank Kraken gets direct access to federal payments infrastructure, and can more seamlessly integrate banking and funding options for customers. As a state-chartered bank, Kraken now has a regulatory passport into other states. Up now, Kraken relied on third-party providers for wire transfers and other services. https://blog.kraken.com/post/6241/kraken-wyoming-first-digital-asset-bank/

The US Commodity Futures Trading Commission (CFTC) ordered Kraken to pay $1.25 million dollars in civil monetary penalties for allegedly violating the Commodity Exchange Act. More specifically, Kraken is accused of failing to register as a futures commission merchant and llegally offering margined retail commodity transactions in digital assets. The CFTC's case alleges that Kraken "offered margined retail commodity transactions in digital assets" to ineligible U.S. customers from June 2020 to July 2021. Kraken has since changed its policy on margin trading, but until June 2021 customers needed to close or settle their positions within 28 days. https://www.cftc.gov/PressRoom/PressReleases/8433-21

The U.S. Securities and Exchange Commission (SEC) is suing Kraken, one of the world's largest crypto exchanges, for illegally operating as a securities exchange without first registering with the regulator. In June, the SEC filed similar lawsuits against Binance and Coinbase, and both are defending against the regulator's claims, as will Kraken. Unique to the Kraken lawsuit are claims that it created a "significant risk" by commingling up to $33 billion in customer crypto with its own corporate assets, quoting Kraken's independent auditor. The SEC listed a number of crypto-assets it deemed to be unregistered securities, which the lawsuit alleges Kraken took a direct role in promoting to the investing public (ADA, AXS, ALGO, ATOM, CHZ, COTI, DASH, FIL, FLOW, ICP, MANA, MATIC, NEAR, OMG, SAND, and SO).

The Kraken exchange will add support for the Lightning Network in 2021, which adds it to a small (but growing) list of exchanges that support the scaling technology thus far. Kraken is hiring a team to manage the feature, which it anticipates will be open for client use sometime in the first half of 2021. Bitcoin's Lightning Network allows its users to send bitcoin faster and more cheaply than if they were using Bitcoin's primary network. These transactions use bitcoin but take place on a "secondary network" with different rules for accounting payments than Bitcoin's blockchain (these transactions are eventually settled and recorded on Bitcoin's blockchain when a user is done using the network).

Crypto exchange Kraken will "immediately" end its crypto staking-as-a-service platform for U.S. customers and pay $30 million to settle Securities and Exchange Commission (SEC) charges it offered unregistered securities. Staking is a process in which investors lock up their crypto tokens with a blockchain validator with the goal of being rewarded with new tokens when their staked crypto tokens become part of the process for validating data for the blockchain. The SEC alleged that Kraken was offering investment contracts in exchange for investors' tokens, without providing the proper disclosures and safeguards required by US securities laws. https://www.sec.gov/news/press-release/2023-25

Kraken Security Labs, part of the San Francisco-based Kraken bitcoin and cryptocurrency exchange, has warned the widely-used Trezor bitcoin hardware wallet has a "critical" flaw-with hackers able to extract the wallet's private keys in just 15 minutes.

US SEC Commissioner Hester Pierce publicly rebuked her own agency over the shutdown of crypto exchange Kraken's crypto staking program in the United States, arguing that regulation by enforcement "is not an efficient or fair way of regulating" an emerging industry. "Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating. Moreover, staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does not cut it." https://www.sec.gov/news/statement/peirce-statement-kraken-020923

A recent Bloomberg article has brought attention to the Ethereum's validation network's over-dependence on the Geth software client that nearly 80% of validators depend on to keep the network running. Coinbase, Binance and Kraken, who are among the validators who rely solely on Geth for their Ethereum services, operate a staking-as-a-service business model, whereby customers give them their tokens to lock up on Ethereum on their behalf. Concerns have been sparked since recently less-used Nethermind crashed for a few hours, and Coinbase and Kraken are now both exploring new smaller clients for their platforms.

Crypto exchange Kraken has acquired Interchange, an accounting, reconciliation and reporting service provider that it says offers an "institutional-grade" service.

According to the Blockchain Transparency Institute's 5th market surveillance report the cleanest exchanges are Kraken, Coinbase, Poloniex, and Upbit. Since the start of 2019, global wash trading has reduced by 35.7% among the real Top-40 exchanges.

A federal court in the Northern District of California authorized the Internal Revenue Service (IRS) to serve a John Doe summons on the crypto exchange Kraken, seeking information about U.S. taxpayers who have used crypto. The IRS is seeking information about taxpayers who conducted at least $20,000 in transactions in crypto between 2016 and 2020. The summons seeks information related to the IRS's "investigation of an ascertainable group or class of persons" that the agency said it has a reasonable basis to believe may have failed to comply with its laws. https://www.justice.gov/opa/pr/court-authorizes-service-john-doe-summons-seeking-identities-us-taxpayers-who-have-used-1

The US Office of the Comptroller of the Currency (OCC) has has conditionally approved crypto-asset custodian Anchorage's application for a national trust charter, and the creation of Anchorage Digital Bank. With a banking charter, Anchorage can provide sub-custody services - like holding assets for a main custodian - for any financial institution. Anchorage is the first crypto company to receive a federal charter, though Kraken and Avanti have both received state charters for digital banking services in Wyoming. While the Wyoming charter enables both Kraken and Avanti to operate nationally, it comes with certain limitations. https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-6.html

A Kraken employee is suing the exchange alleging fake company officer addresses, disappearing customer funds, stock option shenanigans, and sanctions violations.

Kraken were hoping to use Wyoming's somewhat indulgent "blockchain" laws - largely written by the crypto industry - to get a local banking charter. They hoped to use this as a back door into New York state - without getting the New York BitLicense they'd normally need.

Roughly 10.6% of Bitcoin's (BTC) circulating supply is currently held on just five centralized exchanges, according to data published by Chain.info. More than 1.96 million BTC is currently held between the major exchanges Coinbase, Huobi, Binance, OKEx, and Kraken. Likely owing to its custody services, Coinbase holds by far the most, with 944,904 BTC currently spread across approximately 4.39 million different wallet addresses. Huobi ranks second with 323,665 BTC held in roughly 901,600 unique wallets, followed by Binance with 289,961 BTC across nearly 2.7 million addresses. OKEx has 276,184 BTC in 339,000 wallets, while Kraken holds 126,510 Bitcoin among 672,000 addresses.

Coinbase is openly processing Ethereum transactions involving Tornado Cash, a piece of blockchain infrastructure that was sanctioned by the the U.S. Treasury's Office of Foreign Assets Control (OFAC) for providing mixing services to North Korea. Meanwhile, Kraken doesn't process any Tornado Cash transactions. The difference is that Coinbase operates its trading venue in a way that complies with OFAC regulations, but not its validation service, whereas Kraken does. This leads to some thorny questions for OFAC that JP Koning discusses...

"Given the recent SEC filing against Ripple Labs Inc., we are halting XRP trading for U.S. residents no later than January 29, 2021 at 5pm PT (January 30, 2021 at 1:00 UTC). We may begin implementing this process at any time on January 29, 2021, so all U.S. clients are strongly encouraged to resolve their positions prior to that day."

A consortium of fintech and crypto-asset companies launched the Global Dollar Network based on the U.S. dollar-pegged USDG stablecoin issued out of Singapore by Paxos. Paxos claims that USDG is "substantively compliant with the upcoming Monetary Authority of Singapore (MAS) stablecoin framework. Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, Paxos and Robinhood are the initial partners. What is unique about USDG, versus the dominant stablecoins, is that partners (financial services and blockchain firms) receive up to 100% of the revenues generated by USDG's backing assets, and earn additional revenues for minting and acceptance. https://globaldollar.com

Crypto exchanges, including Coinbase and Kraken, have developed a system to rate which crypto-assets are likely to be securities. Crypto-assets are rated on a scale of 1 to 5, with the highest value signifying that a token is a security.

After initially focusing on retail-oriented crypto businesses, Circle has been pouring more resources its so-called stablecoin known as USDC. In December, the Boston-based company sold its Circle Trade over-the-counter trading business to crypto exchange Kraken. It previously unloaded its Poloniex exchange.