Kraken Boss slams UK crypto rules for crippling user experience

Arjun Sethi has compared the FCA’s crypto warnings to cigarette labels, calling them disheartening and counterproductive.

Kraken Co-CEO Arjun Sethi has criticized the UK Financial Conduct Authority’s (FCA) crypto promotion rules, warning that the strict regulatory framework is slowing down transactions and limiting access to services for users.

In recent months, UK financial watchdogs have come under fire from crypto executives for what many see as an overly cautious approach to the regulation of digital assets.

Warning about cigarette boxes on crypto sites

In comments to the Financial Times, Sethi says compared the risk warnings on UK crypto platforms to the health warnings on cigarette boxes, saying that visiting any digital asset website in the country, including Kraken’s, felt like being told that using the service could be harmful. He further explained that the extra transaction steps imposed by the rules make the user experience worse rather than safer.

The FCA’s Financial Promotions Rule, introduced in 2023, will require all crypto companies operating in Britain to prominently display risk warnings on their websites and add ‘positive friction’, such as questionnaires, to gauge whether participants understand the risks associated with crypto investments.

The issue has taken on new urgency following incidents such as the UK’s decision to ban Coinbase’s ‘Everything Is Fine’ ad.

According to the Kraken director, while disclosures are essential, the UK regulator’s overly rigid approach could deter customers from investing, potentially leading to missed opportunities. He added that stricter regulations in the country are depriving millions of users of his exchange of more than 75% of the products enjoyed by U.S. customers.

However, the FCA continues to maintain that its measures aim to protect consumers and not discourage investment. It highlighted that some users may find that cryptocurrency investing is not suitable for them, an outcome it described as the rules “working as intended”.

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The debate over British crypto direction is deepening

Sethi is not alone in his criticism. Just a few weeks ago, Bivu Das, the director of Kraken UK, spoke about the country’s regulatory measures and the slow approach by watchdogs to put a good framework in place.

He added that the Bank of England’s proposal to cap individual stablecoin ownership was unclear, a concern also raised by the vice president of international policy at Coinbase, who noted that no other major jurisdiction had introduced such caps.

However, not all observers share these concerns. David Heffron, a financial regulation partner at Pinsent Masons, argued that the Bank of England’s new stance showed a strong focus on financial stability. Similarly, Hannah Meakin of Norton Rose described this move as a fundamental step towards maintaining the UK’s competitiveness in digital finance.

Meanwhile, Kraken has continued to strengthen its international footprint despite regulatory hurdles, recently acquiring Small Exchange, a CFTC-licensed Designated Contract Market, in a $100 million deal.