Is Kraken legit or not?

Founded in 2011, Kraken, a major global cryptocurrency exchange serving over 7 million users, faces ongoing regulatory scrutiny in the US, including a $30 million SEC settlement, while holding licenses in the UK and parts of Europe.

Mar 21, 2025 at 04:13 pm

Founded in San Francisco, USA in 2011, Kraken is a crypto asset exchange with a wide range of business, covering virtual currency trading, over-the-counter (OTC) trading, margin trading and futures trading. Currently, it is the second largest cryptocurrency exchange in the United States and is also quite influential around the world, serving more than 7 million users.

Legality Situation in the United States

Kraken's operations in the United States have not been smooth. In February 2023, it reached an agreement with the U.S. Securities and Exchange Commission (SEC) for not registering its crypto-staking service, agreeing to pay a $30 million fine and stop providing the service to U.S. customers. In November 2024, the SEC sued Kraken again, saying it mixed client funds and did not register with regulators as stock exchanges, brokers, traders and clearing agencies. This series of events shows that Kraken faces strict scrutiny from regulators in the United States. However, it is also a money service business (MSB) registered by the U.S. Financial Crime Enforcement Network (FinCEN), and is subject to anti-money laundering (AML) and understanding customer (KYC). From this perspective, some of its business in the U.S. meets certain regulatory requirements.

Situation in other countries and regions

UK : Kraken has obtained an electronic currency institution (EMI) license issued by the Financial Conduct Authority (FCA). This license allows it to legally issue electronic currencies, provide customers with more convenient deposit and withdrawal services, and improves compliance and competitiveness in the UK market. This shows that in the UK, Kraken operates legally under the relevant regulatory conditions.

Relatives of Europe : Kraken has obtained a MiFID license operating within the euro zone, which allows it to offer a wider selection of managed derivatives. This means that in some countries in the euro zone, Kraken also has the qualifications to operate legally.

Canada and Japan : Kraken’s decision to withdraw from the Japanese market (2022) and the Canadian market (2023) is mainly due to the tightening of cryptocurrency regulations in these countries. This indirectly reflects that after the changes in regulations, Kraken's local operations are difficult to fully comply with the new regulatory requirements and cannot maintain legal operations.

Advice for investors

If you are considering using Kraken for transactions, be sure to understand the cryptocurrency regulations of your country or region. In some countries and regions, cryptocurrency transactions may not be regulated or subject to legal restrictions. For example, in China, Kraken is not operated directly due to policy reasons. If Chinese users want to trade in Kraken, they need to use a VPN to bypass network restrictions, which has certain uncertainty. At the same time, even if Kraken is legal in some areas, its business still has risks, such as market volatility risks, platform itself operating risks, etc. Investors should fully evaluate their own risk tolerance and make investment decisions with caution.

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