Kraken CEO Slams UK Crypto Crackdown: ’Regulatory Overreach Hurts Everyday Investors’

Kraken's chief executive has fired a warning shot across the bow of UK regulators, calling recent crypto restrictions 'counterproductive' and 'detrimental to retail participation.'

The exchange boss argues that excessive compliance burdens—ironically designed to protect investors—may instead push them toward unregulated offshore platforms. 'When you make legitimate channels inaccessible, people find riskier alternatives,' the CEO stated during a fiery industry panel.

This comes as the FSA's new crypto promotion rules force exchanges to implement invasive investor quizzes and cooling-off periods. Traders now need to pass financial literacy tests just to buy Bitcoin—because nothing says 'decentralized revolution' like government-mandated pop quizzes.

Meanwhile, institutional players continue trading derivatives with 50x leverage through loopholes. The rich get richer, while mom-and-pop investors get a patronizing pat on the head and a 'think of the children' lecture from regulators.

One thing's clear: when even compliant crypto giants like Kraken push back, the regulatory pendulum may have swung too far. Will the UK course-correct before losing its fintech edge to Dubai and Singapore?

• Kraken CEO Sethi criticizes the UK’s crypto rules for slowing down retail investor participation.
• The UK’s crypto risk warnings are comparable to cigarette labels, says Kraken CEO Sethi.
• $1.5B The NinjaTrader deal strengthens Kraken’s position in futures and options.

Kraken co-CEO Arjun Sethi has critiqued the emerging UK crypto marketing regulations harshly. He argues that such rules slow down the processes and make it difficult to get involved as a retail investor. Sethi thinks that the rules are imposing excessive restrictions that will only cause harm to consumers and disrupt the developing crypto market.

In an interview with The Financial Times, Sethi compared the UK’s risk warnings on crypto websites to a cigarette warning. He said, “In the UK today, if you go to any crypto website, including Kraken’s, you see the equivalent of a cigarette box warning: ‘Use this and you’re going to die.” He stressed that risk disclosures are significant, but the 14-step process is excessively complex and will not persuade people to invest.

FCA’s New Crypto Rules and Their Impact

In late 2023, the Financial Conduct Authority (FCA) in the UK announced new financial promotion rules. These regulations require companies to display explicit risk warnings and prohibit investment incentives. Firms should also conduct appropriateness checks to make the customers aware of the risks.

 According to the FCA, these measures are essential to safeguarding the consumer, although according to Sethi, they are simply adding friction to the process, which slows down the transactions and makes them less efficient.

Sethi noted that the further complication of the rules discourages a high number of customers from even attempting to invest. He claimed that it WOULD result in a wasted investment opportunity, as it would harm consumers and the crypto sector.

He thinks that the UK is too conservative, and it does not mirror the increased acceptance of digital assets in other global regions, such as the US.

Source: Financial Times

Kraken Plans Expansion Despite UK Regulatory Hurdles

Founded in 2011, Kraken stands as one of the top 15 crypto exchanges. Sethi, the co-leader of Kraken together with David Ripley, claimed that the UK regulation deprived UK users of approximately 75% of products initiated by the US users. 

These products include elevated-yield offerings and decentralized finance (DeFi) lending, which are not covered by existing regulations.

Kraken is gearing towards a public offering in 2026 and has procured the services of Morgan Stanley and Goldman Sachs to head offerings. Moreover, Kraken has been growing its presence as of late, with the company declaring a $1.5 billion buyout of NinjaTrader, a derivatives platform. This acquisition would strategize Kraken to increase its future and options trading.