Kraken's Fiat Margin Trading Now Restricted in Australia After Court Ruling

Kraken’s Fiat Margin Trading Now Restricted in Australia After Court Ruling

September 10, 2024 Updated November 11, 2024

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Expertise : Cryptocurrency, DeFi, Web3, DAO, Blockchain, FinTech

Teuta is a seasoned writer and editor with over 15 years of expertise in macroeconomics, technology, and the crypto and blockchain sectors. She began her career in 2005 as a lifestyle writer for *Cosmopolitan* before transitioning to business and economic reporting for renowned outlets like *Forbes* and *Bloomberg*. Inspired by thought leaders like Don and Alex Tapscott and Laura Shin, Teuta embraced blockchain's potential, viewing cryptocurrency as one of humanity's most transformative innovations. Since 2014, she has specialized in fintech, focusing on crypto, blockchain, NFTs, and Web3. Known for her strong collaboration and communication skills, Teuta also holds dual MAs in Political Science and Law.

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Highlights

Australian court rules Kraken's fiat margin trading needs regulation, crypto margin exempt.
Kraken adjusts margin product in response, restricting fiat margin trading to wholesale investors only.
Kraken highlights the need for clearer crypto regulations in Australia.

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The Australia Federal Court determined that while fiat margin extensions offered by Kraken are under regulatory scrutiny, crypto margin extensions are exempt from these obligations.

In response, the crypto exchange accepted the court’s decision, yet emphasized the urgency for more transparent cryptocurrency regulations in Australia.

Kraken Eyes Clearer Crypto Regulations in Australia

Adapting to the ruling, the exchange modified its margin trading services, limiting fiat margin trading to wholesale investors only, leaving crypto margin trading unchanged. In a recent update, Kraken reiterated its dedication to adhering to compliance standards and advocated for better regulatory clarity within the cryptocurrency sector.

According to the exchange:

“At the heart of the judgment, the Court determined that when we extended margin in fiat currency to clients it was (and is) subject to the Design and Distribution Obligations (DDO) of the Corporations Act. This was not the case when we extended margin to clients in cryptocurrency.”

The company recognized the court’s decision but highlighted its broader implications for cryptocurrency regulation in Australia. The company said it views the court’s decision as a positive step for advocates seeking new cryptocurrency regulations, despite some disappointment that the ruling identified a violation of the Corporations Act in part of it’s margin product. It stated that the judgment underscored the ineffectiveness of existing Australian laws in regulating cryptocurrency..

The firm, being one of the top crypto exchanges, pointed out that this decision further emphasizes the pressing need for clear and specific regulations for the crypto industry in Australia. The current legal framework leaves both investors and businesses in a state of uncertainty, potentially hindering innovation.

Restricting Fiat Margin Trading in Australia Following Court Ruling

Following the court ruling, Kraken promptly adjusted its margin trading services to align with legal mandates. The platform has now limited margin trading with fiat currency to Australia’s residents who qualify as wholesale investors, as defined by the Corporations Act 2001. However, these changes do not impact margin trading involving cryptoassets.

This adjustment enables unrestricted margin trading in cryptocurrency pairs, while access to fiat margin extensions is confined to wholesale investors. Kraken also reiterated its commitment to maintaining compliance across all jurisdictions in which it operates. While restrictions on Kraken are in place, explore the best crypto exchanges in Australia.