The major U.S. exchange is reported to be close to a settlement with the Securities and Exchange Commission that might require it to register as a securities broker-dealer.
The Kraken exchange may be next on the Securities and Exchange Commission's hit list.
Kraken is being probed by the agency for selling unregistered securities to U.S. citizens, Bloomberg reported on Feb. 8. A settlement may be coming in days, it added.
The SEC has long held that nearly all cryptocurrencies except Bitcoin are securities that must be registered with the agency and sold by registered broker-dealers.
SEC chairman Gary Genlser recently shocked the industry by implying that when Ethereum moved from Proof-of-Work to Proof-of-Stake, Ether may have become a security.
It was not clear which tokens in particular the agency might be focused on, the report said.
But, the agency recently doubled down on its position that tokens are securities in a lawsuit against a former Coinbase manager who pleaded guilty this week to insider trading. While the Department of Justice filed criminal charges that avoided the securities question, the SEC's concurrent civil suit was focused heavily on that. It was on hold until Tuesday's resolution of the criminal case.
The SEC's case focused on nine tokens that were involved in the insider trading, including long explanations of why each was a security in its filing. It also has an open investigation of Coinbase over listing unregistered securities.
And, it is embroiled in a lawsuit with cross-border payments firm Ripple over the same issue that is widely expected to create a court precedent on the question. A ruling in that case could come soon.
With the industry already reeling from the FTX implosion that left customers allegedly looking at $8 billion in losses after their funds were taken without permission and lost in bad trades, a Kraken settlement could have a big impact.
Gensler has made clear that the agency will be coming after exchanges this year, warning them to get registered before legal action is taken.
In a November interview, Gensler warned crypto companies to get properly registered. Warning that time was running out to do that voluntarily, Gensler said:
"If we need to, we're going to be the cop on the beat."
A Kraken settlement might convince other exchanges to try and avoid that.
