Kraken lands in Ireland and obtains MiCA license, and the competition among exchanges in Europe heats up again

As the EU officially implemented the MiCA regulation last year, crypto exchanges have been gradually establishing compliance locally. Kraken recently announced obtaining a MiCA license from the Irish Central Bank, which means the platform can now provide legal digital asset services to 30 countries in the European Economic Area, signaling that Europe is becoming a new compliance battleground for global crypto businesses.

Kraken's Early Layout: Holding Three European Licenses - MiCA, MiFID, and EMI

The US-based crypto exchange Kraken announced that it has obtained a MiCA permit from the Irish Central Bank, allowing it to provide crypto asset trading, payment, and asset management services to 30 member countries within the European Economic Area (EEA). This development makes Kraken one of the few crypto exchange platforms with a comprehensive EU license.

This MiCA license is a key piece of Kraken's European expansion plan. Previously, the company obtained Electronic Money Institution (EMI) licenses from the UK FCA and Irish Central Bank in 2023 and March this year, and secured a Markets in Financial Instruments Directive (MiFID) permit in February.

Co-CEO Arjun Sethi stated: "Trust is the most valuable currency in the crypto industry, and we have always been committed to achieving the gold standard in the European region."

MiCA Becomes the Main Compliance Battlefield for Exchanges in Europe, Platforms Accelerate License Acquisition

Kraken is not the only exchange to obtain a MiCA license. With the crypto regulation coming into effect last year, obtaining licenses has become the top priority for European crypto businesses. The current progress includes:

• Coinbase has obtained licenses in Germany and Ireland

• OKX, Bybit, and Crypto.com announced completion of MiCA registration this year

• Gemini is reportedly in the application process in Malta

The introduction of MiCA symbolizes the EU's first unified digital asset regulatory system. The regulation covers stablecoins, crypto asset issuance, and trading platform operations, aiming to increase market transparency, user protection, and reduce regulatory arbitrage and regulatory gaps between countries.

(Coinbase Officially Obtains MiCA License, Sets Luxembourg as EU Headquarters)

Tether Refuses to Comply, Turns to Indirect Investment Participation

However, according to MiCA regulations, stablecoins must submit comprehensive asset reserve proof and undergo regulatory review to circulate in Europe. Not all crypto companies are willing to comply with MiCA. USDT issuer Tether openly stated it will not apply for MiCA registration, causing platforms like Kraken and Crypto.com to delist USDT.

Nevertheless, with USDT's market cap shrinking by nearly 3% to over $4 billion, Tether is not abandoning local reserve revenues. Instead, it has chosen to invest in the euro stablecoin EURQ by Dutch blockchain company Quantoz Payments, and compliant stablecoins EURR and USDR from European stablecoin issuer StablR, thus indirectly participating in the EU market.

(USDT Market Cap Shrinks Due to MiCA Implementation, Tether Chooses Investment Over Sacrificing Revenues to Indirectly Participate in EU Market)

Optimistic About Clear US Regulation, Kraken Actively Prepares for IPO

While expanding in Europe, Kraken is also adjusting its US strategy. Last week, it announced relocating its global headquarters to Wyoming, a state known for its crypto-friendly policies and regulatory environment.

With the increasingly open attitude towards the crypto industry from former President Trump and the SEC, local crypto companies' IPO news has been emerging. Observing the impressive performance of stablecoin issuer Circle's listing, going public on US stocks has become a new goal for exchanges.

Kraken is no exception. From streamlining organizational structure to acquiring derivatives trading platforms to expand its product line, these moves are undoubtedly paving the way for a potential successful US listing.

(Regulatory Relaxation Triggers Exchange IPO Wave: Who Can Replicate CRCL's Gains to Become the Next Multi-Bagger Stock?)

Compliance or Exit: Exchanges Must Choose a Side

Kraken has obtained the Irish MiCA license, which not only confirms the EU regulatory system but also reveals that the core competition in the next stage of the crypto market will shift towards "compliance capabilities". As regulatory frameworks in various countries become clearer, crypto exchanges willing to proactively comply are gaining policy dividends and user trust, while players resisting regulations will seek alternative solutions.

The Federal Housing Finance Agency (FHFA) ordered Fannie Mae and Freddie Mac, two federally regulated mortgage companies, to consider cryptocurrencies as reserve assets and include them in risk assessment conditions for potential lending on Wednesday. This immediate federal-level order may enable crypto asset holders with insufficient cash to qualify for home loans and fulfill their home-buying dreams.

FHFA Director William Pulte stated on social media that mortgage companies need to be prepared to treat cryptocurrencies as collateral loan assets, noting that this administrative order aligns with Trump's vision of making the US the world's crypto capital. Pulte's order did not specify which cryptocurrencies could be considered assets, but notably, the FHFA document emphasizes the need to begin implementation quickly.

Key Points of FHFA Administrative Order

Given the critical role of Fannie Mae and Freddie Mac in the US residential mortgage secondary market, the FHFA issued a new administrative order requiring cryptocurrencies to be included in acceptable asset categories for single-family home loan risk assessment, promoting long-term homeownership.

The FHFA noted that cryptocurrencies, as an emerging asset class, have the potential to provide wealth accumulation opportunities outside the stock and bond markets. They instructed Fannie Mae and Freddie Mac to be prepared to incorporate cryptocurrencies that comply with regulatory frameworks into reserve assets, conduct risk assessment and control, and submit them to FHFA for review. The order takes effect immediately, emphasizing rapid implementation.

Is the Era of Subprime Mortgage Sell-Off Returning?

Michael Burry, the real-life inspiration for the movie "The Big Short", once precisely predicted the inevitable collapse of the US real estate market. In 2008, the US experienced a chain reaction due to subprime mortgages and events involving Lehman Brothers, severely impacting the global real estate industry. At that time, banks, to close housing transactions, loosened standards to allow many low-credit or unqualified borrowers to obtain bank and mortgage company guarantees. Lehman Brothers even packaged these mortgages into bond products sold by bank financial advisors to investors. When secondary market borrowers couldn't pay their mortgages, major US banks faced the risk of unrecoverable bad debts. These "too big to fail" banks could only be saved by government intervention.

With cryptocurrencies' extremely high volatility, one wonders how banks and mortgage companies will assess the "value" of this emerging asset. For those without homes, owning crypto assets provides an opportunity to buy a house, but there's still a significant risk of liquidation and bankruptcy if mortgage payments cannot be met.

Thank you, Donald! Should people who can't afford houses be grateful to this former real estate tycoon? Pondering from afar.