Business

Steve Kaaru

Kraken up in arms over proposed crypto regulation in Canada

Kraken has submitted a comprehensive response to the proposed security law framework for cryptocurrencies in Canada. The exchange argued against the framework, indicating that it would only stifle legitimate cryptocurrency trading and deny many Canadians the opportunity to participate in a revolutionary industry. The framework had been published jointly by the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Securities Administrators.

Kraken addressed many of the sections that it considered misguided. One of these was the relationship between an exchange user and the exchange itself. The exchange made it clear that crypto exchanges only act as custodians and don’t own the customer’s digital assets. It added, “The application of a securities law framework, accordingly, is both unnecessary and inappropriate to this structure.”

The framework had also expressed concerns regarding the risks related to crypto exchanges. One of these was these exchanges don’t adequately safeguard customers’ assets. The assertion was probably in light of recent hacks in which hackers have stolen hundreds of millions of dollars.

However, according to Kraken, the marketplace has evolved now and exchanges are very strict on their security. Moreover, an exchange’s security protocols will be the “key competitive differentiator going forward.” The public has also been demanding that the exchanges beef up their security and the risk of attacks is diminishing with time, the exchange wrote.

The IIROC had also indicated that investors usually don’t have important information on the crypto assets that they invest in, an issue Kraken took fault with. It stated:

“This risk is premised on the idea that government (and Exchanges, for that matter) is in a better position to assess an individual’s risk tolerance than the individual. […]Rather than focusing on how to “protect” people from themselves, we advocate for educating people – and allowing them to make smart decisions that meet their own requirements and risk tolerances.”

The exchange addressed other issues as well, including possible conflict of interest for exchanges that conduct proprietary trading as well as manipulation of prices on some exchanges.

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