As a seasoned crypto investor with a decade-long journey through the digital asset landscape, I’ve witnessed my fair share of regulatory battles and market fluctuations. The recent ruling against Kraken’s local operator in Australia serves as yet another reminder that the wild west days of cryptocurrency are slowly fading away, replaced by a more mature, regulated environment.
In simpler terms, the Australian court found that Kraken’s local business was in breach of legal requirements because they did not follow necessary regulations when providing a service called margin trading.
In simpler terms, an Australian court found that Bit Trade, who manages the Kraken cryptocurrency exchange in Australia, failed to meet regulatory standards by providing a margin trading service without properly designing and distributing it according to the rules.
In a press release dated August 23rd, the Australian Securities and Investments Commission announced a substantial regulatory move against a prominent international cryptocurrency operator. ASIC Deputy Chair Sarah Court emphasized that this action serves as a clear warning to the crypto industry, indicating that the regulator will closely examine products to ensure they meet regulatory requirements, thereby safeguarding consumers.
According to ASIC, since October 2021, Bit Trade’s “margin extension” service has been accessible to Kraken customers without first determining the appropriate market segment as required by law. This action is in violation of section 994B(2) of the Corporations Act, which stipulates that the issuer of a financial product must identify the suitable consumer group before offering it.
The court found that while the obligation to repay a crypto asset under the margin extension product does not constitute a deferred debt, repayment in national currencies does, making the product a credit facility. ASIC and Bit Trade have been given seven days to agree on declarations and injunctions, with ASIC seeking financial penalties against the company at a later date.
In response to the ruling, a representative from Kraken explained to the press that the decision serves as another example illustrating the innovative nature of cryptocurrencies.
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2024-08-23 08:41