Kraken Co-CEO Arjun Sethi Slams UK’s Restrictive Crypto Regulations

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Kraken co-CEO Arjun Sethi has criticized the United Kingdom’s stringent crypto regulations, arguing that the country’s restrictive framework is stifling innovation, limiting user access to key financial tools, and driving capital out of the digital asset market.

Speaking to the Financial Times, Sethi said the UK’s regulatory overreach is preventing users from accessing nearly 75% of crypto products, including DeFi staking and lending two of the most popular ways for investors to earn yield on digital assets.

“Users Are Locked Out of Innovation,” Says Sethi

Sethi expressed concern over the severe restrictions on retail crypto investors in the UK. Since the Financial Conduct Authority (FCA) introduced new rules, several major global crypto firms have either scaled back their offerings or stopped serving UK clients entirely.

According to Sethi, these regulations have left most users “locked out of innovation”, as they can no longer access products that remain freely available in other major crypto markets such as the U.S., Singapore, and the EU.

He emphasized that this environment makes it difficult for companies like Kraken to compete and expand.

“If users can’t access most of the products that make crypto dynamic — from DeFi lending to staking — the UK risks falling behind in global digital finance,” he warned.

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Kraken Rejects Tokenized Stocks: “A Terrible Idea”

Addressing another growing trend, Sethi spoke about tokenized real-world assets (RWAs) — digital tokens that represent ownership in traditional assets, such as stocks, bonds, or real estate.

Sethi made it clear that Kraken has no plans to offer tokenized shares of private companies, directly referencing Robinhood’s tokenized OpenAI shares, which he bluntly called “a terrible idea.”

He warned that tokenizing private company equity introduces “significant legal and liquidity risks”, particularly for firms that are not publicly listed. According to Sethi, such products can easily mislead investors into believing they’re buying legitimate ownership stakes when, in fact, they’re purchasing unregulated digital derivatives.

UK’s Crypto Future at a Crossroads

As global crypto adoption accelerates, industry leaders like Sethi argue that the UK must find a better balance between investor protection and innovation. Otherwise, the country risks losing its competitive edge to crypto-friendly hubs like the U.S., Singapore, and Hong Kong.

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