The Canadian cryptocurrency exchange Kraken has published a paper in which it argues against the proposed securities framework. This framework is the one that regulates crypto assets by the Canadian Securities Administrators (CSA) as well as the Investment Industry Regulatory Organization of Canada (IIROC). The coming altcoin news also show a Twitter post published by the exchange on May 16.
Kraken strongly recommends against Canada imposing a security law framework on crypto currency exchanges in public response to the Proposed Framework for Crypto-Asset Trading Platforms published by the CSA and the IIROC #bitcoinca https://t.co/z2TgW3vjQu
— Kraken Exchange (@krakenfx) May 16, 2019
While arguing against the proposed securities framework for crypto exchanges, Kraken says that this is a contractual arrangement between an exchange and an exchange user as a security. The exchange denied that these contracts constitute securities, explaining:
“…most reputable exchanges operate as custodians or bailees. As such, the assets are legally owned by the customer and not the Exchange operator. This means, critically, that the customer’s interest is not derived from the underlying asset — it IS the underlying asset. The application of a securities law framework, accordingly, is both unnecessary and inappropriate to this structure.”
The authors of the paper also listed the following four contract stipulations of the proposed securities framework, saying that the exchange users indeed own their crypto assets and that these assets in that manner, fall outside of the securities law.
“1. Contractual terms indicating that the relationship is in the nature of a custodial relationship; 2. Customer has the right to dispose of the assets at any time by transferring them off of the Exchange; 3. Contractual terms governing escheatment of the underlying asset; 4. With respect to bank accounts holding customer funds, titling of the bank account as a “for the benefit of” (FBO) or “custodial” account, or similar wording,” is what is in the Kraken statement which is featured in the latest cryptocurrency news while addressing a number of security risks posed by the proposed securities regulation.
Speaking of, the exchange stated that a laissez-faire approach will serve it space better than implementing hands on regulatory policies. They announced:
“Without the cudgel of regulation, Exchanges are developing proof-of-reserve techniques, obtaining SOC certifications and enhancing their security and internal controls. As more Exchanges embrace these features, the competitive expectations for all of the Exchanges increase — for the better.”
Meanwhile, aside from this CSA proposed securities regulation, many best cryptocurrency news sites report that in the US, we see several members of congress reintroducing the Token Taxonomy Act which seeks to exclude cryptocurrencies from security regulations.
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