In the midst of a fraught period for some high-profile United States crypto firms and financial regulators, Kraken’s chief legal officer (CLO) is calling for a dose of pragmatism going forward.
Speaking on Bloomberg’s “QuickTake Stock” broadcast on Thursday, CLO Marco Santori told viewers, “You’re living in a fantasy world if you don’t believe that this industry is going to face heavier, more Wall Street-like regulation from governments in the U.S. and abroad.”
Santori’s comments follow threats by the United States Securities and Exchange Commission (SEC) earlier this month to sue the well-known crypto exchange Coinbase over a crypto yield program it deemed to be a security. The move sparked the exchange’s CEO, Brian Armstrong, to adopt a combative and resistant stance on social media, although the exchange has since announced it will scrap the program at issue, in line with the SEC’s wishes.
Commenting directly on the developments, Santori said: “I’ve certainly followed Brian’s tweets, and I’ll say that look, you’re just not being honest with yourself about the crypto community if a little bit of you doesn’t think he’s saying what a lot of people are thinking.” He soon pivoted, however, taking pains to articulate the more pragmatic agenda he’s pursuing at Kraken:
“I can’t support that kind of approach with regulators. It’s never been successful historically, and from our experience, we’ve found the SEC to be open to discussion.”
U.S. financial regulators, particularly under SEC chair Gary Gensler, have indicated they intend to introduce a host of policy changes this year that will affect token offerings, decentralized finance (DeFi), stablecoins, custody, exchange-traded funds and lending platforms. Despite his hawkish tone, Gensler has appealed to industry actors to engage with the agency going forward. With the regulatory outlook still evolving, the crypto markets meanwhile remain highly sensitive to the possible implications of each of the regulator’s crypto-related public interventions.