Kraken co-head criticizes UK’s strict cryptocurrency regulations

Arjun Sethi, co-CEO of Kraken, argues that UK rules on promoting virtual assets are hurting the consumer experience and could deter potential users from investing in cryptocurrencies.

According to a report in the Financial Times, Kraken co-CEO Arjun Sethi warned that the UK financial regulator’s cautious stance on crypto trading could delay implementation. He commented that the UK’s strict rules on promoting cryptocurrency services could ultimately impede capital flows and prevent potential users from venturing into the market.

The co-CEO said users in the UK will encounter a frightening warning when they open any cryptocurrency-related website, including Kraken. Sethi likened the pop-up to messages on cigarette packs advising consumers about the potential risks associated with cigarettes: “If you use this, you’re going to die,” he said.

“It’s even worse for consumers because of the speed at which they have to make transactions. Disclosure is important, but it’s even worse when there are 14 steps,” Sethi said in a media interview, marking the first time that crypto officials have spoken out against the Financial Conduct Authority’s financial facilitation rules for crypto services, which will be introduced in 2023.

He also said that the UK’s strict crypto rules prevent users from accessing around 75% of the entire suite of crypto products, including DeFi staking and lending. This is due to FCA rules prohibiting trading incentives.

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The FCA’s rules require companies promoting crypto services in the UK to post clear risk warnings on all their websites and apps, create “positive friction” between companies, and require users to complete assessments to prove whether they understand the risks associated with crypto trading. Companies are also prohibited from offering incentives to investors.

Sethi said these additional precautions could deter customers from investing in cryptocurrencies altogether, potentially causing them to miss out on potential profits.

In response to criticism, the FCA said the rules were necessary to ensure customers were aware of both the benefits and risks associated with investing in cryptocurrencies. However, the regulator noted that while customers must answer questions before seeing promotions from crypto companies, they do not necessarily have to answer them every time they make a transaction.

“While some consumers may make an informed decision that investing in cryptocurrencies is not suitable for them, our rules are working as intended,” the FCA said in a statement.

UK financial regulators are known for their cautious stance towards cryptocurrencies, especially when compared to US crypto-promoting regulations. Just last month, the FCA sued Justin Sun-linked cryptocurrency exchange HTX for failing to comply with local financial facilitation rules.

Kraken’s next steps in the near future

Kraken co-CEO Arjun Sethi said in an interview with the Financial Times that the cryptocurrency company does not offer tokenized shares in private companies. He specifically mentioned competitor Robinhood’s decision to sell OpenAI stock. The decision faced backlash in the market earlier this year, with OpenAI denying any involvement in the tokens promoted on the platform.

Sethi said Robinhood CEO Vlad Tenev’s claims are “flawed” and that he thinks tokenizing shares in private companies is a “terrible idea” because investors will have a hard time selling their investments.

When asked about Kraken’s plans to launch an IPO within the next year, Sethi did not comment or provide details on the exact timeline.

Since March 2025, Kraken has held an electronic money institution license from the UK’s Financial Conduct Authority. The license will allow cryptocurrency exchanges to issue electronic money and enable faster deposits and withdrawals for UK customers.

Not only that, the license will also allow the exchange to establish partnerships with local financial institutions and introduce new products aimed at UK users. At the time, Kraken’s UK general manager Viv Das said the UK was “on the brink of large-scale adoption of cryptocurrencies” and the exchange was ready to pave the way.

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