The cryptocurrency industry should brace for ‘Wall Street-style’ regulation, according to Kraken Chief Legal Officer Marco Santori.
“You’re just 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, and Kraken has simply been practical about that future,” Santori told Bloomberg.
Authorities have been cracking down on the cryptocurrency industry over the past few months, taking issue with everything from stablecoins to decentralized exchanges to lending products. As warnings mount from state regulators and the SEC alike, foreshadowing more stringent regulation, crypto firms are bracing for battle.
Some leaders in the industry have taken a more adversarial approach, including Kraken founder and CEO Jesse Powell. Rival Coinbase CEO Brian Armstrong also shares this perspective.
SEC battles crypto firms
Earlier this month, the SEC issued a warning against Coinbase, threatening to sue if it followed through with the launch of its Coinbase Lend product. Following the announcement, Armstrong unleashed a barrage of critical tweets, accusing the agency of “sketchy” behavior. Even billionaire Mark Cuban thought that Coinbase should take “be aggressive in their engagement with the SEC.”
While these leaders may be voicing the frustrations felt by many in the crypto industry, Santori, says the approach is counter-productive. Although he admitted that many may actually feel this way, Santori believes that open cooperation is the only realistic solution. “I can’t support that kind of approach with regulators,” he said. “It’s never been successful historically and from our experience, we’ve found the SEC to be open to discussion.”
Due to pressure from the SEC, Coinbase eventually decided to forego offering its Lend product. According to some of its latest job listings, Coinbase is looking to bolster its defense, seeking out lobbying and compliance expertise.