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- 1 Kraken, a US-based popular crypto exchange, has imposed stricter laws, making it compulsory for users to share their identities.
- 2 The law’s critics are against it as it will harm the foundation principle of the crypto landscape.
- 3 The believers in the new regulation are in favor, stating it will increase transparency and trust.
A popular US-based cryptocurrency exchange, Kraken, has begun requiring additional information in the U.K. regarding transactions of self-custody wallets that occurred to and from its accounts.
The exchange has sent an email to some of its UK-based customers. The mail stated that if the required information is not submitted, accounts can get locked until the necessary information is provided.
The recent announcement has raised questions about privacy, regulation, and the future of cryptocurrency transactions.
What does Kraken’s movement represent?
The information requirement from Kraken for its wallet owners will represent a shift from the traditional hands-off approach often associated with cryptocurrency exchanges.
The email sender’s authenticity was checked to confirm the movement. Thus, it was further restated that the customers or users must verify their ownership of self-custody wallets used for transactions with Kraken exchange wallets.
If customers are not directly controlling their self-custody wallets, then the concerned exchange requires the names and residential addresses of those who control them.
How did crypto enthusiasts react to the change?
The change has raised concerns and insecurities among crypto experts and enthusiasts. Chief Analyst at Cryptoslate, James Van Straten, has publicly shared the mail, highlighting the implications of Kraken’s decision.
James Van Straten has highlighted that this change will act as the beginning of surveillance. He stated that this could serve as the beginning of a state of surveillance in the U.K.
With new regulations, exchanges like Kraken must collect and retain detailed data about customers’ transactions and identities.
What are the regulatory developments in the European Union (E.U.)?
Kraken’s announcement timing has coincided with broader regulatory developments in the E.U.
The newly updated regulation, commonly stated as the Funds Transfer Regulation (FTR), also imposed similar regulatory requirements for transactions involving service providers operating in the E.U.
This regulation will be implemented in the E.U. towards the end of 2024. Kraken has taken proactive measures to keep itself ahead of the industry, and it also represents increased surveillance and compliance in the cryptocurrency sector in the U.K.
The critics in the industry argue that increased regulatory pressure would sideline the fundamentals of decentralization and anonymity that are at the core of the launch of cryptocurrencies.
Self-custody wallets have been supported and used to maintain complete control over assets without depending on centralized intermediaries such as exchanges. The increasing regulatory pressure on exchanges for data collection and communication on these platforms is heading towards breaking this autonomy.
On the other hand, supporters claim that these regulations will help identify illegal activities such as money laundering and terrorism financing.
It will improve transparency by verifying users’ identities and monitoring their transactions. Additionally, it will increase trust in the cryptocurrency ecosystem and make it more responsible.
Conclusion
Kraken’s compliance with British regulations would mark a significant step towards greater legitimacy and acceptance of cryptocurrencies in traditional finance.
It has made a significant development in cryptocurrency regulation. The cryptocurrency landscape will continue to evolve, and users and industry operators must find a balance between regulatory compliance, user privacy, and the fundamental principles of decentralization.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
