Most countries have tightened the leash of regulations over crypto assets in order to have maximum control over the criminalization of digital currencies. A leading cryptocurrency exchange platform Kraken has recently published its latest “transparency report,” in which it reveals that managing a crypto-based financial service in the US is becoming difficult because of unconventional legal costs.
Kraken is a US-based exchange, and also operates in countries such as Canada, Europe, and Japan. It claims itself to be “the world’s largest Bitcoin exchange in euro volume and liquidity.” It is headquartered in San Francisco. In its report, the exchange notes that it has received 315 subpoenas from US law enforcement agencies like the FBI, HSI, CIA, IRS, SEC, and other government bodies. On the other hand, the exchange received only 160 requests from other countries. These numbers indicate the increasing legal costs for fintech startups in the US.
Peek at our Compliance team's 2018 Transparency Report. You can see why many businesses choose to block US users. Cost of handling subpoenas (regardless of licenses) is quickly becoming a barrier to entry. Inquiries up 3x YoY. pic.twitter.com/YbyLEqhOUf
— Kraken Exchange (@krakenfx) January 5, 2019
The report also shows that the Law Enforcement Inquiries sent to Kraken was three times more in 2018 than in 2017. Notably, The last quarter of 2018 indicates the maximum number of requests, with 65 in October, 44 in November and 47 in December. Kraken is an exchange which is having a sizable American user base amounting to nearly 20 percent of all customers. The exchange blames legal compliance costs for being one of the major cause behind businesses deciding to block US users. The exchange emphasizes in a Tweet stating, “you can see why many businesses choose to block US users.”
The exchange firm added that the Cost of handling subpoenas (regardless of licenses) is quickly becoming a barrier to entry.” Kraken also noted that the investigators didn’t understand the amount of struggle it takes to submit “petabytes of data,” particularly when the information the agencies seek related to a handful of transactions.
Apart from that, back in December Florida-based United American Corp. (UnitedCorp) has filed a lawsuit against Kraken, Bitmain, Bitcoin.com, and Roger Ver. The suit claimed that the defendants jointly implemented unfair methods and practices to manipulate the Bitcoin Cash (BCH) network for their benefit and detriment of UnitedCorp and other BCH stakeholders. Moreover, Japanese police observed a significant uptick in reports from cryptocurrency exchanges regarding suspicious transactions, especially after a bill obliging the exchange to report such activity.