DIGITAL COMMERCE CHAMBER SUPPORTS KRAKEN AGAINST SEC 

The Digital Commerce Chamber (CDC) is taking a stand against what it sees as the SEC’s overly aggressive regulatory approach, advocating for clear, established regulations over ad-hoc enforcement actions.

The CDC has submitted an amicus curiae brief in support of the cryptocurrency exchange Kraken, challenging a lawsuit brought against it by the U.S. Securities and Exchange Commission (SEC) in 2023.

In its most recent submission, the CDC backed Kraken’s request to dismiss the SEC’s lawsuit.

Digital Commerce Chamber Defends Kraken’s Position

On February 27, the Chamber submitted an amicus brief arguing against the SEC’s current method of regulating the digital asset sector.

The CDC contends that the SEC’s forceful regulatory measures, which prefer enforcement over transparent, legislated guidelines, are detrimental to innovation in the digital asset realm. The CDC believes this regulatory stance not only impedes economic progress and job generation but also undermines efforts towards financial inclusivity.

The organization criticized the SEC’s broad application of securities law to digital asset transactions as legally unsound, arguing that digital assets do not constitute “investment contracts.”

The CDC cautioned that the SEC’s regulatory actions could adversely affect the digital asset industry, valued in the trillions, and consequently the U.S. economy, stressing the importance of establishing clear regulations through legislative action rather than leaving it to regulatory bodies.

In November 2023, the SEC accused Kraken of operating without the proper registration as a securities exchange, broker, dealer, and clearing agency. It also claimed that Kraken had commingled client funds with its own. Kraken has refuted these claims and has opted to legally contest the SEC’s lawsuit.

Kraken Introduces a Division for Institutional Investors

In the meantime, Kraken has rolled out Kraken Institutional, a new sector aimed at institutional clients, hoping to attract a segment of the market interested in spot Bitcoin exchange-traded funds (ETFs).

This new division is designed to consolidate existing services like crypto staking (excluding U.S. clients) and spot and over-the-counter trading. It targets asset managers, hedge funds, and affluent individuals.

Led by Tim Ogilvie, co-founder of Staked (acquired by Kraken in December 2021), Kraken Institutional seeks to cater to the surging interest from institutions in cryptocurrency, spurred by recent Bitcoin ETF approvals.

Kraken Institutional is poised to compete with other major players like Coinbase Institutional and Coinbase Prime, launched in 2021 for institutional investors, as well as Binance Institutional, which entered the scene in mid-2022.

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