Kraken, a notable cryptocurrency exchange, is reportedly planning to expand its services to include trading of U.S. stocks and exchange-traded funds (ETFs). According to reports from September 27, Kraken is aiming to launch these additional services in 2024 through a division known as Kraken Securities. This significant expansion would necessitate licensing from pertinent regulatory bodies, such as the Financial Industry Regulatory Authority in the U.S. and relevant financial authorities in the U.K., licenses which Kraken reportedly already possesses.
This move towards offering more traditional financial products is reminiscent of other exchanges’ efforts to diversify their offerings. FTX.US had also announced similar plans before its closure. Such expansions can potentially make platforms like Kraken more comprehensive financial hubs, allowing users to manage a wider array of assets and investments all in one place. Robinhood is an example of a platform that already offers both stock and crypto trading services.
However, Kraken’s new venture does not come without potential challenges. The company is currently facing legal issues in Australia for alleged non-compliance with design and distribution obligations related to one of its trading products. Earlier this year, Kraken also settled with the U.S. Securities and Exchange Commission (SEC), agreeing to pay $30 million related to its staking services and programs for U.S. clients.
As Kraken navigates these legal and regulatory landscapes, the successful expansion into stock and ETF trading will likely depend on strict adherence to global financial regulations and a commitment to transparency and compliance. Such a move could potentially attract a broader user base to the platform, capturing investors interested in a multi-asset platform that includes both crypto and traditional financial products. Nonetheless, the exact details and the eventual rollout will greatly depend on regulatory approval and the resolution of existing legal matters.
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