Crypto exchange Kraken has filed a pre-registration undertaking (PRU) with the Ontario Securities Commission to provide greater investor protections.
The new registration will make the exchange a restricted dealer across Canada. This follows revised investor protection guidance issued by the Canadian Securities Administrators.
Kraken Takes on the Challenge for Greater Investor Protection
“The PRU will help maintain the integrity of our operations and help all Canadians achieve financial freedom through crypto,” Kraken said in a blog post.
Currently, Kraken offers Canadian CAD spot trading pairs and employs 250 Canadians.
CSA introduces enhanced investor protections in February 2023. Under the new regime, a PRU involves better custody and segregation of customer funds. Exchanges may not offer margin or leveraged trading to Canadian investors, nor allow them to purchase or deposit stablecoins.
Following the revised regulations, several Kraken competitors such as OKX, Blockchain.com and Deribit pulled out of Canada.
Most recently, Kraken agreed to pay $30 million to the US Securities and Exchange Commission to settle allegations that the exchange offered its staking product as an unregistered security to US customers. It later stopped offering its crypto asset staking product to US customers.
SEC to use $2.4 billion to strengthen enforcement team
Crypto industry players in the US, including Coinbase Chief Legal Officer Paul Grewal, have criticized the SEC for regulating rather than enforcement functions. provide rules,
The SEC drafts regulations based on existing US securities laws. So far, it has not been defined which crypto assets or transactions constitute a security. SEC Chairman Gary Gensler has stated that existing securities laws, such as the Securities Act of 1933 and the Securities Exchange Act of 1934, provide adequate guidance.
In addition to the lawsuit against Kraken, the SEC has served Coinbase with a Wells notice. In the notice, the SEC alleged that certain crypto assets are Coinbase listed securities. The agency served a notice to stablecoin issuer Paxos last month, alleging that its BUSD stablecoin is an unregistered security.
US President Joe Biden recently requested the SEC to allocate $2.4 billion, which could bode ill for the crypto industry.
In a prepared testimony dated March 29, 2023, Gensler confirmed that the funding could help the SEC hire additional enforcement staff and limit bad practices in the crypto industry. He noted that most of the crypto industry was still a Wild West, prompting the SEC to issue 36% more enforcement actions in 2022 than in 2021.
Gary Gensler is scheduled to appear before the House Financial Services Digital Assets Subcommittee on April 18, 2023. He will be asked to lay down the rules here and clarify his approach to digital assets.
In other securities news, the Thai Securities Exchange recently confirmed that it will remove limits on retail investors purchasing tokens in initial coin offerings.
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