Kraken, a popular cryptocurrency exchange, has received a Virtual Asset Service Provider (VASP) license from the Central Bank of Ireland. This license allows the exchange to operate legally in the country, and Kraken believes it demonstrates their adherence to strict anti-money laundering and counterterrorism financing rules.
The exchange’s Head of European Operations, Mark Jennings, emphasized the importance of clear and effective regulation for the mainstream adoption of cryptocurrencies. He added that Kraken remains committed to working with European regulators to ensure compliance.
The need for regulatory clarity in the crypto industry has been apparent for years, particularly in the top economies such as the United States and China. While China has banned digital assets altogether, the US regulatory landscape is not closed off, but regulatory bodies have largely approached the topic through enforcement.
In recent months, the Securities and Exchange Commission (SEC) has taken multiple enforcement actions against established exchanges such as Kraken and Coinbase. This has pushed crypto firms to seek more solid footing, resulting in an exodus and cross-border expansion to locations such as Europe and Hong Kong, which have a proactive approach to regulation.
Europe is on the verge of implementing the Markets in Crypto-Assets (MiCA) framework, which establishes rules for cryptocurrencies and the industry. The framework places various regulatory requirements on crypto firms and mandates disclosures to bring them up to par with traditional financial institutions. Additionally, the European Parliament has introduced the Data Act, which supplements the MiCA regulation and establishes protocols for handling sensitive personal and business data.
While the MiCA framework and Data Act have yet to come into force, companies have already begun applying for necessary approvals, and more announcements are expected in the coming months. Similarly, Hong Kong is also establishing a full regulatory net for the crypto industry and is already processing applications from VASP hopefuls. Officials have reported that over 80 firms have shown interest in setting up shop in the city-state, while around 20 firms have applied for a license already.
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