Kraken is committed to ensuring that we comply with applicable laws and regulations. Our commitment to compliance and our evolution to keep up with evolving regulations positions us to advance our mission of accelerating the global adoption of crypto to promote financial freedom.
Proactive regulatory adaptation
Kraken has been proactive in adapting to regulatory changes. For example, in 2013, when the US FinCEN introduced new guidelines, we delayed their launch to ensure full compliance. This decision underlined our understanding that compliance with regulations is vital to the longevity of our platform.
Investing, upgrading and automating core components of our risk-based program – such as BSA/AML, sanctions, governance, transaction monitoring, quality assurance and training programs – are an integral part of our overall compliance approach.
In 2023, we testified before Congress to outline our standards for risk management, security and customer protection. We also highlighted potential improvements in U.S. crypto regulation for Congress, citing legislative and regulatory advancements in other developed economies.
Crypto markets transcend borders, unlike traditional financial markets. Digital assets provide new ways for people to transact borderlessly, in real time and fairly. We will continue to lend our collaborative voice to the ongoing debate on effective regulation.
Clear regulatory frameworks will go a long way in preventing illicit activities, thereby preserving the integrity of the crypto market. As part of our commitment, we implement global standards such as MiCAR (Markets in Crypto Asset Regulator).
Building trust and transparency
We combine a commitment to following the rules with a deep respect for the trust our customers place in us. This means complying with the regulations and laws applicable to our business, while actively protecting our customers’ privacy and maintaining the highest security standards.
We also continue to lobby and support candidates who advance laws and regulations appropriate for the crypto industry while challenging proposals that we believe do not make sense.
We prioritize transparency in our compliance processes. As an example of our commitment, we frequently work with law enforcement and regulatory agencies around the world. We have provided 2,510 data packets to global law enforcement and regulatory agencies in response to legal data requests from Kraken customers in 2023, demonstrating our commitment to cooperating with law enforcement to advance the global crypto adoption.
We do this in accordance with strict policies and procedures designed to protect customer privacy to the fullest extent of the law. You can see which agencies requested data last year in our Kraken 2023 Transparency Report.
Global Compliance Core Practices
Kraken’s crypto compliance program is designed to detect, mitigate and prevent financial crime, market abuse, data privacy violations and fraud while protecting its customers and, more broadly, crypto markets.
Our best-in-class compliance team applies data- and risk-driven solutions leveraging automated “regtech” to our policies, procedures and controls. Our Board of Directors and executive leadership set the “tone” and oversee our program.
Our program consists of fundamental pillars:
- We strictly adhere to all laws and regulations: This includes anti-money laundering rules, sanctions, terrorist financing, market regulation, data privacy and consumer protection in the geographies where we operate to protect our customers and prevent actors malicious people to exploit our platform. This includes KYC (know your customer) and EDD/CDD (enhanced due diligence/customer due diligence) requirements.
- Secure licenses and registrations: We maintain required licenses and actively work with regulators to remain in good standing, underscoring our commitment to lawful operations.
- Robust controls and data-driven reporting: We continually strengthen our risk-based controls while measuring and monitoring their effectiveness through real-time dashboard reporting.
- Governance and independent testing: Our governance and controls are subject to risk assessments and tested by independent third parties, in addition to internal quality assurance monitoring.
- Investing in Compliance Expertise: Our global compliance team includes experts from regulators, law enforcement and the private sector, ensuring robust and comprehensive practices that are subject to ongoing training.
Building a dynamic, future-fit compliance function
Evolving regulatory regimes across the world further highlight the importance of compliance and its growing role within the crypto industry. The new rules involve additional required recordings, reporting and disclosures.
In this context, we are committed to building a forward-looking compliance function that:
- Protects our customers: Our program puts our customers first, protecting their security and privacy. We offer them the best products and services while respecting applicable law.
- Anticipates and responds to regulatory developments: We are committed to evolving our compliance strategies to meet current and emerging regulations.
- Collaborate with law enforcement: We work closely with authorities at all levels to prevent misuse of the platform and protect crypto investors.
- Engages with industry and policy makers: We aim to shape positive crypto policies that support the growth and innovation of the crypto sector, without imposing undue burden on customers or the industry.
We have designed our compliance program to flexibly adapt to ever-changing global crypto regulations. We continue to scan the horizon to stay ahead of regulatory changes, maintaining a secure and reliable platform that respects the principles of financial freedom.
