The Chamber of Digital Commerce Supports Kraken in Lawsuit Against SEC
The Chamber of Digital Commerce (CDC) has filed an amicus curiae to defend Kraken in a lawsuit initiated by the U.S. Securities and Exchange Commission (SEC) in 2023. The CDC supported Kraken’s motion to dismiss the lawsuit, aiming to address and counter the SEC’s current approach to regulating the digital asset industry.
Challenging the SEC’s Regulatory Tactics
The CDC believes that the SEC’s aggressive regulatory tactics, through enforcement actions rather than clear legislative rules, could stifle innovation within the digital asset space. This approach not only hinders economic growth and job creation but also affects financial inclusion efforts. The CDC argues that applying securities laws broadly to all digital asset transactions is legally flawed, asserting that digital assets are not “investment contracts.”
The CDC warns that the SEC’s enforcement efforts could have a significant impact on the trillion-dollar digital asset space and, consequently, the United States economy. It emphasizes the need for clear regulations established by Congress instead of relying solely on the SEC’s efforts to regulate.
Kraken’s Lawsuit by the SEC
In November 2023, the SEC filed a lawsuit against Kraken, accusing it of operating as an unregistered securities exchange, broker, dealer, and clearing agency. The SEC also alleged that Kraken commingled customer funds with its corporate finances. Kraken and its representatives denied these allegations and opted to challenge the lawsuit in court.
Kraken Launches Institutional Platform
Kraken has recently launched a new division called Kraken Institutional, which aims to serve institutional clients interested in spot Bitcoin exchange-traded funds (ETFs). The division combines existing institutional services such as crypto staking for clients outside the United States, spot and over-the-counter trading, and crypto staking.
Tim Ogilvie, the co-founder of Staked (acquired by Kraken in December 2021), will lead the new division. Ogilvie highlighted the growing institutional interest in crypto following the approval of Bitcoin ETFs.
Competition in the Institutional Market
Kraken Institutional enters a competitive market, with established players like Coinbase Institutional and Coinbase Prime already serving institutional investors since 2021. Binance Institutional, introduced in mid-2022, is also a competitor for Kraken Institutional.
Hot Take: CDC Supports Kraken to Foster Innovation in Digital Asset Industry
The Chamber of Digital Commerce (CDC) has filed an amicus curiae in support of Kraken’s defense against the SEC lawsuit. The CDC argues that the SEC’s regulatory approach could hinder innovation and economic growth within the digital asset industry. By challenging the SEC’s broad application of securities laws to all digital asset transactions, the CDC aims to promote clear regulations established by Congress. Meanwhile, Kraken has launched its institutional platform, Kraken Institutional, to serve institutional clients interested in spot Bitcoin ETFs. The division faces competition from established players like Coinbase Institutional and Binance Institutional. Overall, these developments highlight ongoing efforts to shape the future of digital asset regulation and institutional adoption.
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