Risks in Kraken’s SEC settlement compliance overhaul

The March 2026 staking ruling

The SEC confirmed on March 17, 2026, that staking is an "administrative task" for network security rather than a securities offering. This ruling contradicts the February 9, 2023, enforcement action where the SEC alleged Kraken sold unregistered securities. Kraken agreed to pay $30 million and shut down its US staking service to settle those charges. By April 2022, US investors held $2.7 billion in crypto assets in the Kraken Staking Program. This program generated $147 million in net revenue for Kraken before the settlement. The SEC originally alleged that the Kraken Staking Program enabled the exchange to achieve a competitive advantage by pooling participant assets to earn higher returns than individuals could obtain through direct staking. While the program provided annual returns of up to 21 percent via email advertisements and social media, the SEC argued that investors lost control of their tokens. These tokens will be returned to spot wallets, though ETH remains subject to the Ethereum network’s Shanghai upgrade constraints. The regulatory uncertainty previously caused several liquid staking protocols to shut down between 2023 and 2024. These projects had working products and real users earning staking yield but could not afford the legal costs or the risk of enforcement. The SEC’s decision to target the program was based on the idea that users relied on Kraken’s expertise for profits. Why did the SEC pursue Kraken in 2023 if the classification remained administrative?

Compliance shifts and technical friction

The exchange faces significant operational pressure as it navigates its regulatory overhaul. Kraken dismissed its CFO earlier this year. The company also paused its planned 2026 IPO after it filed for a listing in November 2025 following an $800 million funding round. Technical failures create additional friction for users. The exchange suspended the AIR token on March 24 and the BSU token on April 6 because smart contract issues prevented on-chain transfers. The AIR shutdown lasted over a week, whereas the BSU suspension remains a recent operational hiccup. These repeated failures in a single quarter suggest vulnerabilities in how the platform monitors third-party contracts. You should watch how these technical glitches impact institutional liquidity. The SEC probe specifically targets the legality of token trading. The SEC’s original complaint alleged that Kraken’s failure to register prevented investors from accessing material information about the business and financial condition of the exchange. This investigation forces Kraken to consider a costly registration as a broker-dealer to comply with existing laws. A failure to meet these new standards could derail future growth. The regulatory cloud around unregistered securities is the largest threat to the company’s valuation.

Trading costs and revenue patterns

Kraken overhauled its fee schedule on July 9, 2026, and raised the base tier to 0.40 percent for makers and 0.80 percent for takers. This change ties lower tiers to assets held on the platform rather than 30-day volume.

Kraken reported $648 million in revenue last quarter. In Q1 2025, the company posted $472 million in revenue and $187 million in adjusted EBITDA. The regulatory pressure from the SEC remains a primary hurdle for the exchange’s future market entry. Kraken Financial, a subsidiary, obtained a limited-purpose master account from the Federal Reserve of Kansas City. This account allows the firm to hold balances at the Fed and provides a routing number, 107007621. This access eliminates dependency on correspondent and intermediary banks. Kraken’s ability to resolve these legal disputes determines its capacity to regain its status as a top global exchange.