Cryptocurrency exchange Kraken has published a lengthy blogpost explaining its position on regulation. Last week New York state Attorney General Eric Schneiderman announced that he had sent letters and questionnaires to leading exchanges, including Kraken, looking for assurances on the quality of their controls and customer protection. Kraken CEO Jesse Powell refused to cooperate, saying that “this kind of abuse” was “not OK”.
Somebody has to say what everybody’s actually thinking about the NYAG’s inquiry. The placative kowtowing toward this kind of abuse sends the message that it’s ok. It’s not ok. It’s insulting. https://t.co/sta9VuXPK1 pic.twitter.com/4Jg66bia1I
— Jesse Powell (@jespow) 18 April 2018
Yesterday’s statement makes clearer the exchange’s position on the New York State’s “Virtual Markets Integrity initiative” and its questionnaire. Included in the statement is a list of things Kraken believes that traders care about, and a list of things that they don’t.
According to Kraken, traders are primarily interested that an exchange works quickly and does not suffer downtime. They also want security and privacy, including a “minimal document requirement for on boarding”.
However, Kraken suggest that traders simply do not care about many of the things that concern regulators, including regulatory approval, “being protected from making risky investments” and, most controversially, “being protected from market manipulation”.
This last has caused raised-eyebrows as though traders may not care about a regulator’s opinion, they do care that markets are run fairly. The view that traders are fine with other players manipulating the market has dampened some of the enthusiasm for what had largely been seen as a principled stand by the San Francisco exchange.
Crypto-commentator Nic Carter pointed out that “this might backfire”, while CryptoRae insisted that traders “do care about market manipulation”:
Hi @krakenfx, I think traders do care about market manipulation.
You shouldn’t be so cavalier with your statements, especially when your exchange is used as a pricing source for other traded instruments. pic.twitter.com/shJUVOIQEl
— CryptoRae (@cryptorae) April 23, 2018
Andreas T. went further, labelling Kraken’s response “idiotic”.
Kraken’s response in the blog is idiotic. More even so, the “we don’t want to provide answers because “traders don’t care about what you ask”. Most traders are idiots who don’t know they are manipulated. Lack of regulation of exchanges = manipulation of crypto prices.
— Andreas T. (@andreastzav) April 23, 2018
Kraken no longer operates in New York State due to the regulatory overheads. As such it believes there is no need to cooperate with the investigation.
“To be fair, we would have given the same response to the AG [attorney general] of North Korea”, they said.
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