Kraken has had a tough time with the United States regulatory agencies. Despite the difficult environment, the crypto exchange is planning to roll out its own bank.
Marco Santori, Kraken’s chief legal officer, revealed Kraken Bank is very much on track to launch.
According to Kraken Support, the offering will initially be available to the existing clients of the exchange in the US. Potential international expansion is also in the cards.
Its official website states that Kraken Bank will be based on the Wyoming SPDI framework allowing it to “prioritize asset custody and safekeeping, data protection, security standards, and stringent regulatory oversight.”
It further explained that SPDI banks are required to maintain full reserves, which means user funds won’t be lent out without their permission. This is a major bone of contention that has gained much prominence, especially after the dramatic collapse of FTX, which allegedly misappropriated customer deposits to benefit its sister trading firm, Alameda.
The website maintained that all assets will be kept on hand and available as cash or, the least risky, most liquid cash equivalents. Kraken Bank will also have significant capital reserves and surpluses of its own capital to cover the full balance of all clients, even in a scenario of a potential “bank run.”
The launch of Kraken Bank was phased in 2022 but was delayed due to unknown reasons. Meanwhile, Santori affirmed that the launch is very much on track and went on to add,
“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 development comes in the wake of SEC chief Gary Gensler hitting the California-based crypto exchange with a $30 million settlement after charging it for failing to register its crypto asset staking program.
Kraken agreed to terminate the service and pay the fine in disgorgement, prejudgment interest, and civil penalties without admitting to or denying any wrongdoing. Its legal officer also refrained from commenting on the settlement with the agency but added that the staking feature had contributed a minor portion of the company’s revenue.