Kraken CEO Believes A Regulatory 'Crackdown' On Crypto May Be In Store

April 13, 2021 03:25 PM
Crypto Story of the Day

Crypto Story of the Day




Bitcoin (BTC) has achieved new all-time highs above USD 63,000 after 6 weeks of range-bound trading. In the Top 10, Ripple (XRP) is outperforming and was up 25% this morning, reaching a market cap of USD 77 billion.

Crypto Story of the Day

In an interview with CNBC, Kraken CEO Jesse Powell said he believes “there could be some [crypto regulatory] crackdown.” Powell further speculated on a potential crypto “ban,” explaining that it also “might be too late” for such a measure. The CEO’s remarks come just ahead of competitor Coinbase’s Wednesday IPO. 

Jesse Powell discussed the implications of the Treasury Department’s proposed rules that would see businesses report crypto transactions greater than USD 10,000 to FinCEN and store customer data when transactions exceed USD 3,000. Powell described those proposed rules as something “that could really hurt crypto and kind of kill the original use case, which was to just make financial services accessible to everyone.”

Powell added that he hopes that “U.S. and international regulators don’t take too much of a narrow view on this... Some other countries, China especially, are taking crypto very seriously and taking a very long-term view.” However, Powell also said he believes it may be “too late” to implement a ban, as such a move would make crypto “more attractive'' by acting to validate the space. 

Kraken is also planning a public offering in 2022, according to Powell. In November of last year, ahead of the Treasury publishing its proposed rules, Coinbase’s CEO Brian Armstrong tweeted that there were rumours about upcoming rules. He described the yet-to-be-published rules as having the ability to “kill many of the emerging use cases for crypto.”

In a recent interview, SEC Commissioner Hester Peirce also touched on a similar topic, noting that she thinks we were “past that point very early on because you’d have to shut down the Internet” and that she doesn’t see how a ban could be implemented in a practical sense. Peirce’s remarks were preceded by Ray Dalio in March, who speculated that BTC could see similar restrictions to gold in the 1930s when U.S. “Government leaders didn’t want gold to compete with money and credit as a storehold of wealth.” 

Given Coinbase’s IPO tomorrow, Powell's discussions around hypothetical regulatory actions against crypto are auspiciously timed. Furthering that thesis, the points made by the CEO are far more superficial and “off-the cuff” than you’d expect from someone in Powell’s position. For example, while China’s taken a “long-term view on crypto,” as we discussed in yesterday’s note, that view has been focused on limiting crypto’s growth. 

With this in mind, we feel that these comments aren’t meant to foreshadow any expected crypto regulations in the way that Armstrong did last November. We aren’t treating these comments with the same level of caution.

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