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In August,&nbsp;<a href="https://www.thecoinrepublic.com/2024/08/24/kraken-must-answer-sec-allegations-as-court-denies-dismissal-request/">Kraken</a>&nbsp;experienced a regulatory setback in Australia after a court decided that its fiat margin trading product was against the law. 
As per the ruling, Kraken was found to have breached the Corporations Act’s Design and Distribution Obligations (DDO) by extending its margin extension product in fiat currency to retail investors. However, the decision did not apply to margin trading in cryptocurrency, thus creating a rather ambiguous legal framework. 
The Australian Securities and Investment Commission (ASIC) welcomed the decision as a win for the regulator, saying Kraken had flouted regulations. However, Kraken pointed out that the ruling underlines the necessity of clear crypto asset regulations. 
Kraken has since changed its platform only to allow fiat margin trading for Wholesale Investors under the Corporations Act. 
<h2 class="wp-block-heading" id="h-kraken-calls-for-clearer-crypto-regulations-in-australia">Kraken Calls for Clearer Crypto Regulations in Australia</h2> 
Kraken’s case exposes the gaps in Australia’s crypto regulations. In its decision, the court pointed out that the Corporations Act governs margin trading in fiat currencies, although it does not yet cover cryptocurrency extensions. This gap shows that Australia does not have proper regulation as other countries are working on implementing specific&nbsp;<a href="https://www.thecoinrepublic.com/2024/09/05/vivek-ramaswamy-criticizes-us-crypto-regulations/">crypto regulations</a>. 
Nevertheless, Kraken highlighted the challenges investors and businesses are experiencing under the existing regulatory environment. This case exemplifies the still unclear and sometimes contradictory regulations surrounding cryptocurrencies in Australia. 
Kraken noted that regulatory risks could slow down innovation and development of the crypto space. 
However, Asics has advocated for tighter measures, and others have opined that regulations more specific to crypto are needed. Given the new rules, Kraken has reiterated its commitment to compliance across all jurisdictions and is exploring how it can continue to operate in Australia. 
<h2 class="wp-block-heading" id="h-kraken-limits-fiat-margin-trading-in-australia">Kraken Limits Fiat Margin Trading in Australia</h2> 
Upon the court ruling, Kraken changed its platform to reflect the decision. Margin trading is no longer available for all clients, as only wholesale investors can participate in this product offering. 
However, margin trading with cryptocurrencies remains accessible to all users because it is not regulated similarly. Kraken assured that the company operates per local and international laws and adjusts its services accordingly. 
The company stated that it is considering other options to expand the fiat margin service offerings without attracting regulators’ attention. These changes are part of Kraken’s larger efforts to ensure its platform complies with laws across all jurisdictions. 
Kraken’s case arises when the regulation of cryptocurrencies in Australia is still in its infancy compared to other countries. While the legal environment is being enhanced, it is possible that the complete legislation will not be enacted until the following year. 
This uncertainty poses a challenge for companies such as Kraken since they have to work with rules that often need to be clarified or contradictory. 
<h2 class="wp-block-heading" id="h-countries-push-forward-with-clear-crypto-regulations">Countries Push Forward With Clear Crypto Regulations</h2> 
However, Kraken is not immune to regulatory issues in Australia alone. The company has faced similar problems in other jurisdictions. In 2020, the U.S. Securities and Exchange Commission (SEC) accused Kraken of operating an unregistered securities exchange. 
The same cases in other jurisdictions indicate that the states increasingly tightening control over crypto exchanges. Currently, countries such as the United States, the United Kingdom, and Singapore are moving faster to formulate cryptocurrency regulations. 
These nations have done well to lay out a clear roadmap on how they want the crypto industry to operate, something Australia has not done. According to the industry giants, clear rules foster creativity while safeguarding consumers. 
This also comes as there is increasing demand for regulated crypto products in Australia. For example,&nbsp;<a href="https://www.thecoinrepublic.com/2024/09/05/monochrome-seeks-to-launch-ethereum-etf-in-australia/">Monochrome Asset Management</a>&nbsp;has sought approval to list an Ethereum Exchange-Traded Fund (ETH ETF) on the Cboe Australia exchange. 
Incase of the approval, this ETH&nbsp; ETF would follow the earlier launch of the Monochrome Bitcoin ETF, indicating the growing need for regulated crypto investment products in the country. 
The post <a href="https://www.thecoinrepublic.com/2024/09/09/krakens-fiat-margin-trading-hits-wall-in-australia-whats-next/">Kraken’s Fiat Margin Trading Hits Wall in Australia, What’s Next?</a> appeared first on <a href="https://www.thecoinrepublic.com">The Coin Republic</a>.

Kraken’s Fiat Margin Trading Hits Wall in Australia, What’s Next?

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