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Kraken to launch US-listed stock and ETF trading services after $30 million SEC settlement

source-logo  fxstreet.com 28 September 2023 03:50, UTC
  • Kraken to launch US-listed stock and ETF trading services after $30 million SEC settlement
  • Cryptocurrency exchange Kraken plans to launch US-listed stock and ETF trading services in 2024.
  • The move comes as ETF theme continues to bear hope for crypto players, looking at it as a possible catalyst.
  • If the plan works out, it will mark its first venture outside crypto, Bloomberg Intelligence indicates.

Kraken, a cryptocurrency exchange with a rather robust standing in the European market, has indicated plans to diversify, with intentions to leverage the first-mover advantage towards Exchange-Traded Funds (ETF). Meanwhile, the crypto markets continue to appeal to the US Securities and Exchange Commission (SEC) for a nod amid a long pile of applications already on the financial regulator’s desk.

Kraken exchange wants in on ETF euphoria

Kraken platform has indicated plans to launch a US-listed stock and ETF trading services in 2024, which if successful, would represent the exchange’s first venture outside crypto. The platform already accounts for 3.5% of the global spot trading market share but has been recording dwindling trading volumes of late.

Crypto exchange Kraken plans to launch U.S.-listed stock and ETF trading services in 2024, its first business outside the crypto, according to Bloomberg. The company already holds the required regulatory licenses in the United Kingdom and has applied for a broker-dealer license…

— Wu Blockchain (@WuBlockchain) September 28, 2023

It should be noted that Kraken is coming from a recent fight with the US SEC, coughing up to $30 million in settlement fees for failure to register its crypto-staking service as a security offering. Even after the settlement, the exchange was compelled to terminate the staking service for US customers.

The latest boldness, therefore, comes as the platform awaits approval for a broker-dealer license from the US Financial Industry Regulatory Authority, with regulatory licenses and regulatory permits to operate in the UK already in hand. Based on the report, which cited persons unnamed for obvious reasons, Kraken crypto exchange will set up a new subsidiary just for the venture, christened Kraken Securities, to begin offering trading in the US and UK.

Once the venture premieres, the platform’s eligible customers will be prompted to activate the service, with a portfolio of crypto, stocks, and ETFs shown within one account balance.

Kraken shorter-term goals

The US-listed stock and ETF trading services are a longer-term goal, expected in 2024. For the shorter term, the crypto exchange, led by CEO Jesse Powell, will be debuting a qualified custodian for institutional clients within the week. This custodian is expected to be independent of Kraken. Notably, the platform has already applied for an approval from the state of Wyoming.

If the approval does come, it will set the exchange in line as an industry competitor against Robinhood Markets Inc., in a space where competitive advantage borders along commission-free services. Other players in that space include Public.com, which like Robinhood, already has presence established in the UK and will launch later in the year.

Meanwhile, the exchange recently secured regulatory approvals for its European expansion plans with intentions to offer fiat and crypto-related services. Beyond Europe, it also has an E-Money Institution (EMI) license from the Central Bank of Ireland and is recognized in Spain as a Virtual Asset Service Provider (VASP).

Cryptocurrency metrics FAQs

What is circulating supply?

The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.

What is market capitalization?

Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.

What is trading volume?

Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.

What is funding rate?

Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.

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