Kraken now requires users in the UK to verify their self-custodial wallets or authenticate wallet identities to comply with local regulations.
Reportedly, Kraken has enforced a necessity for users in the United Kingdom to verify their self-custodial wallets. As per several recent posts, Kraken has initiated the execution of this verification procedure, referencing “UK regulations.”
Enhanced Verification Procedures
A segment of the email disclosed by Van Straten highlighted the importance of keeping up-to-date information about clients and their account activities concerning self-custody wallets.
The mentioned email stressed that self-custodial wallets are under scrutiny in accordance with UK regulations.Although details regarding the regulations prompting this action remain undisclosed, Kraken Support later confirmed the commencement of requests to its UK-based users for wallet verification in response to inquiries.
The correspondence from Kraken requested users to verify ownership or control over the self-custodial wallets utilized for cryptocurrency transactions.
Users were additionally directed to furnish comprehensive details if they were not the proprietors or managers of the designated wallets, which encompassed identifying the accountable individual and their residential address.
Inaction in response to the verification request by February 23, 2024, would lead to Kraken enforcing limitations on the pertinent accounts until the requisite information is supplied, as delineated in the email.
Increased Verification Requirements by Exchanges
Kraken’s recent move is in line with a broader trend seen across cryptocurrency exchanges, where they increasingly require users to link external crypto addresses they interact with.
For instance, Bitstamp implemented a similar approach in early 2021, citing updated regulations from the Dutch government.
Meanwhile, self-custodial wallets, which grant users control over their private keys, transfer wallet control to whoever possesses the private keys.
Consequently, control isn’t tied to any individual’s identity, making the verification process for self-custodial wallets challenging and sparking debates on regulatory approaches.Regulators perceive the uncertainty surrounding self-custodial wallets as worrisome.
The gradual expansion of know-your-customer (KYC) regulations to encompass entities dealing with digital assets now includes self-custodial wallets.
This shift has led regulated exchanges to conduct due diligence on self-custodial wallets they interact with.
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