The Chamber of Digital Commerce (CDC) has filed an amicus curiae to defend Kraken in a lawsuit the U.S. Securities and Exchange Commission (SEC) initiated in 2023.
Notably, the CDC supported the crypto exchange’s motion to dismiss the lawsuit in its latest filing.
Chamber of Digital Commerce Argues for Kraken
In a February 27 filing, the Chamber explained that the amicus brief aims to address and counter the SEC’s current approach to digital asset industry regulation.
1/ We’re stepping in. We’ve filed an amicus curiae brief in the @SECgov v. @Kraken case. Our goal? To end the SEC’s attempt to regulate the #digitalasset industry WITHOUT legislative authority.https://t.co/tJ5oAwM8D2 pic.twitter.com/FclcrZWYjL
— Chamber of Digital Commerce (@DigitalChamber) February 27, 2024
The CDC’s argument is rooted in the belief that the SEC’s aggressive regulatory tactics, through enforcement actions rather than clear, legislated rules, could stifle innovation within the digital asset space. According to the CDC, the approach is not only hindering economic growth and job creation but also affecting financial inclusion efforts.
The trade body explained that the SEC’s attempt to apply securities laws to all digital asset transactions broadly is legally flawed. It further asserted that digital assets are not “investment contracts.”
The body warned that the enforcement efforts by the SEC could impact the trillion-dollar digital asset space and, by extension, the United States economy. Hence, there is a need to bring about clear regulations whereby Congress needs to bring statutory clarity instead of relying on the watchdog’s efforts to regulate.
Notably, in November 2023, the SEC initiated a lawsuit against Kraken, accusing the cryptocurrency exchange of functioning as an unregistered securities exchange, broker, dealer, and clearing agency. Furthermore, it alleged that Kraken had mixed customer funds with its corporate finances, among other accusations. In response, the firm and its representatives denied the SEC’s allegations, choosing to challenge the lawsuit in court.
Kraken Launches Institutional Platform
Meanwhile, the exchange has launched a new division, Kraken Institutional, dedicated to serving institutional clients to capture a portion of the market for spot Bitcoin exchange-traded funds (ETFs).
The institution brand aims to combine the existing institutional services, such as crypto staking for clients outside the United States and spot and over-the-counter trading crypto staking. The target audience, it explained, is asset managers, hedge funds, and high-net-worth individuals.
Tim Ogilvie, the co-founder of Staked (which was acquired by Kraken in December 2021), will lead the newly established division. Ogilvie noted the rapidly growing institutional interest in crypto owing to the recent approval of Bitcoin ETFs.
Kraken Institutional is entering into direct competition with established players such as Coinbase Institutional and Coinbase Prime, which were launched in 2021 to serve institutional investors. Kraken Institutional faces competition from Binance Institutional, which was introduced in mid-2022.
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