Kraken Is In Advanced Talks With U.K. Regulators For Expansion To Fill The Void Left By FTX’s Collapse

The post Kraken Is In Advanced Talks With U.K. Regulators For Expansion To Fill The Void Left By FTX’s Collapse appeared first on Coinpedia Fintech News

Kraken, one of the world’s prominent cryptocurrency exchanges, is reportedly in advanced talks with the U.K.’s Financial Conduct Authority (FCA) to expand its London-based subsidiary, Crypto Facilities, into new avenues of asset custody and fiat-denominated futures contracts.

Kraken’s Comeback To The UK Market  

Acquired by the cryptocurrency exchange Kraken in 2019, Crypto Facilities is currently in discussions with the U.K.’s Financial Conduct Authority (FCA) to broaden its asset custody services, according to a recent report by Bloomberg.

Mark Jennings, the CEO of the London-based company, revealed that they are also negotiating to introduce futures contracts that would be denominated in the fiat currencies held for their clients. The firm specializes in providing futures contracts in cryptocurrency assets for institutional investors.

The collapse of FTX last November sent bearish waves to the market. The void left by FTX’s exit from the derivatives market has created an opportunity that Kraken is keen to seize. To accomplish this, the company would need to extend its multilateral trading license, obtained in 2020. Jennings anticipates that this expansion process could take anywhere from six to 12 months to complete.

Jennings said, “It’s a key driver as we expand out what we do in the institutional market across crypto. Prior to FTX we’d be hitting $700 million to $800 million a day in trading volume. It is now closer to $100 million.”

UK Brings Regulatory Obstacles

Kraken recently unveiled a staged rollout of deposit support for both euros and British pounds via PayPal Holdings Inc. Launched earlier this week, this funding feature is presently accessible solely through Kraken’s mobile application. Users residing in Europe and the United Kingdom stand to benefit from this new offering by Kraken.

However, the UK’s regulatory environment has forced PayPal to stop allowing UK customers to buy crypto through its platform from October as it plans to comply with new rules on crypto promotions.

Crypto companies in the U.K. have recently begun enforcing the “travel rule,” to combat money laundering activities. However, inconsistent global application of this rule complicates compliance efforts.

Guidelines established by the Financial Action Task Force (FATF), which include mandating firms to disclose the identities behind transactions, have sparked debates within the crypto community. Criticism is rising mainly due to the adapting of these norms to unique aspects of the crypto, like self-custodied wallets that are not managed by any regulated entity.