Kraken exchange inquiries surged by 50% in 2019

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Updated on Mar 11, 2020

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According to Kraken crypto exchange, the number of regulatory inquiries grew by 50% in 2019, when compared to 2018.
Over 60% of inquiries came from the United States, where the FBI leads with around 116 requests in a single year, while the SEC only sent 20 requests.
Meanwhile, the cost of regulatory compliance continues to grow, which continues to push crypto businesses out of the US.

The year 2019 brought a lot of changes to the crypto industry, and while the prices certainly saw better performance than in 2018, not every aspect of the industry was positive. According to popular crypto exchange, Kraken, the law enforcement inquiries grew by 50% last year, as opposed to 2018.

At the same time, compliance costs surged as well, making the last year rather difficult for Kraken.

Kraken shared an infographic from its report called ‘2019 Transparency Report’ recently, stating that it received as many as 710 requests in a single year. This is quite a few requests more than 475, which is how many the exchange received back in 2018.

It's that time again. Here's a snapshot of our Compliance team's 2019 Transparency Report. Team America still ahead with 61% of total requests, down from 66% last year. Other geos gaining fast. Trend is obvious. Costs are increasing, even in a relatively flat market. pic.twitter.com/4AMe11unoL
— Kraken Exchange (@krakenfx) January 7, 2020

Meanwhile, more than half of the requests (432) came from agencies based in the United States. According to Kraken’s statement, the US leads with 61% of total requests, which is actually a reduction from 66%, from 2018. However, this does not mean that the US sent fewer requests — it only indicates that other regions are catching up, and the trend is beginning to rise.

Compliance cost becoming a major barrier for crypto firms

Kraken further states that the costs of compliance are growing, even when the market is relatively flat. Still, it is interesting to see which of the US agencies are the most interested in sending regulatory inquiries, and Kraken has secured that data, as well.

Apparently, the FBI is leading with around 116 requests in 2019. It was followed by the DEA, which sent 73 requests, while the Homeland Security Investigations’ ICE sending 65. The US SEC, on the other hand, sent barely 20 requests.

However, due to increased costs and pressure from all of these agencies, numerous businesses are choosing to block US users and go international, as Kraken itself noted last year. Once again, the US seems to be making a wrong move when it comes to handling the crypto industry, pushing businesses out into the world, and losing the advantage it had when it comes to conquering the crypto world.