Crypto exchange Kraken is facing a $1.25 million fine as part of a settlement of claims by the Commodity Futures Trading Commission (CFTC). The regulator has accused the platform of conducting margin transactions with digital assets without registering as an authorized futures commission merchant (FCM).
According to the press release shared by the CFTC, Kraken has violated the provisions of the Futures Trading Act by offering related products from June 2020 to June 2021. In addition, such transactions must be conducted on a designated contract market (DCM), with Kraken not being registered as such either.
CFTC Commissioner Dawn Stump has acknowledged that it may be difficult for Kraken to comply with the law due to the lack of a clear notion of "actual delivery" of a digital product. Stump has said that a single FCM and DCM registry would be "unprecedented." She has added:
"It remains unclear what regulations it would have to abide by. The transactions the CFTC took umbrage with would still have been illegal with am FCM registration, since Kraken also operates as an exchange."
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Following the results of the proceedings, the CFTC has proposed to launch a new legislative initiative in order to determine clear rules for regulating exchanges and other participants in the crypto sector.