This week the New York Attorney General’s Office sent out 13 letters to various cryptocurrency exchanges to conduct an inquiry into their trading platforms. While most crypto exchanges welcomed the investigation, popular trading platform Kraken refuses to respond to the request. As state governments and regulators join the federal government in figuring out the regulatory frameworks they will put in place around crypto, companies in the space will either be the standard-bearers of cooperation or the foes of the entities looking for them to comply.
“I realized that we made the wise decision to get the hell out of New York three years ago and that we can dodge this bullet.”
Jesse Powell, CEO of Kraken
Kraken is a California based company whose exchange sees a good portion of the volume of daily crypto trading. In 2015, Kraken left New York State because of the states BitLicense framework that they deemed onerous and ridiculous such that they would rather leave the state than conduct business under it. Over time, many in the industry have complained about and sought to throw out the New York State BitLicense structure (unsuccessfully to date) because they believe that doing business under its umbrella makes little to no sense. Whatever your opinion of the BitLicense structure it is important to note that Kraken’s stance has been very much anti-regulation from the get-go.
Somebody has to say what everybody's actually thinking about the NYAG's inquiry. The placative kowtowing toward this kind of abuse sends the message that it's ok. It's not ok. It's insulting. https://t.co/sta9VuXPK1 pic.twitter.com/4Jg66bia1I
— Jesse Powell (@jespow) April 18, 2018
While it is important to note that the NY AG has no jurisdiction over a non-domiciliary company, Kraken could have decided to respond to the AG’s request with no consequences. Of course, as a company, they are responsible for doing what they believe is the best action for their company. Nonetheless, the cryptosphere may have all benefited greatly if the companies who received the request fully cooperated. The more we all engage with the regulators, the more likely it is that the industry becomes accepted and matures through said acceptance by the powers that be.
This is the approach we are taking with The Praetorian Group. While we might feel that the filing of a Form S-1 with the SEC for our ICO is overly burdensome and somewhat disagreeable with the cryptosphere generally, any pragmatist understands that what we are doing matures the space. When a company defies the regulators, it only throws more wood on the fire. Our approach of full engagement and cooperation with the regulators is the right approach for the space because we all know that “they are coming.” If the crypto world wants to last ad infinitum, it needs to continue to work pragmatically with the regulatory bodies not openly defy them to the tune of “we are here to stay no matter what you say or create.”