Cryptocurrency Exchange Achieves Regulatory First

Kraken, one of the world’s largest cryptocurrency exchanges by volume has achieved a regulatory first. Its subsidiary, Crypto Facilities (trading under the name Kraken Futures), has become the first cryptocurrency company to obtain a license to operate a multilateral trading facility (“MTF”).

MTFs, introduced under the Markets in Financial Instruments Directive II, allow users to trade a variety of instruments in accordance with a published rulebook on the execution of trades.  

As Kraken note, this provides two main developments for the world of crypto assets. Their new MTF will be the only authorised derivatives marketplace in Europe providing leveraged cryptocurrency trading. This expanded product range will offer convenient access to those seeking exposure to certain crypto assets without holding the underlying product. In addition, many institutional clients are constrained in terms of the platforms they can trade on. The availability of a regulated MTF such as this opens the door for institutional clients to trade in previously unavailable products.

Beyond the obvious benefits for Kraken themselves and market participants, the FCA’s decision to grant authorisation is a notable step in the ongoing expansion of the UK regulatory sphere into the world of crypto assets. With other MTF operators actively pursuing regulatory approval, it will be interesting to see if the two year labour Kraken undertook to achieve authorisation might give way to quicker and more efficient regulatory approvals in the crypto world.