Kraken co-CEO: UK crypto regulations deter adoption
Kraken co-CEO Arjun Sethi criticized the UK’s strict crypto regulations, arguing that the Financial Conduct Authority’s 2023 financial promotion rules are harming the consumer experience and slowing crypto adoption. Sethi likened the required risk warnings to cigarette-style health labels, noting that lengthy disclosures create friction for fast transactions and may deter investors. Under the FCA’s UK crypto regulations, firms must display clear risk warnings, enforce user assessments, and ban trading incentives, effectively blocking retail access to about 75% of crypto products, including DeFi staking and lending. Sethi also ruled out tokenizing private company shares, branding the idea “terrible” due to liquidity concerns. The FCA defended its stance, saying the rules are designed to ensure informed decisions. Kraken holds an FCA Electronic Money Institution license, enabling faster deposits and withdrawals and potential new UK partnerships. Sethi declined to comment on Kraken’s IPO plans. The debate over UK crypto regulations highlights a tension between consumer protection and market growth.
Bearish
The FCA’s strict crypto regulations and mandatory disclosures are likely to reduce retail participation and trading volumes in the UK market, creating friction for fast-moving traders. Past episodes—such as regulatory crackdowns in South Korea and China—have led to short-term sell-offs and lower liquidity. In the short term, UK-based traders may delay entering positions due to additional compliance steps, weakening demand and price momentum. Over the long term, persistent barriers could slow adoption, cap market growth, and deter new capital inflows until regulations are eased or streamlined, maintaining bearish pressure on the UK crypto segment.