Kraken, a global cryptocurrency exchange platform, has stopped offering support for the Lightning Network to its German customers, allegedly due to new regulations that reportedly came into effect on September 10, 2024. The halt in support coincides with Kraken's transition to using DLT Finance, a BaFin-regulated banking provider, which has raised concerns among customers.

According to a statement from Kraken's customer service representatives, the change was necessitated by the new regulatory requirements. "We have to conform to constantly changing regulations. Unfortunately, the change involves Lightning being no longer available as part of DLT's BaFin authorization," a Kraken support representative explained. The Lightning Network is a second-layer solution that allows for faster and more cost-effective Bitcoin transactions.

However, the German banking authority, BaFin, has expressed confusion regarding these new regulations. Speaking to The Rage, a BaFin press office representative stated that the authority was unaware of any new regulations that took effect on the mentioned date. The spokesperson added that BaFin had not issued any public statements on potential disciplinary measures that might affect Kraken or DLT Finance but acknowledged the possibility that ongoing internal processes may be impacting service providers like Kraken.

Kraken or DLT Finance have not yet issued formal statements addressing the situation, and both companies have remained silent regarding the exact nature of the regulatory changes. The lack of clarity from both Kraken and BaFin has left German users without a timeline for when or if Lightning Network support might return.

In a post on StackerNews, a Kraken support representative informed a German customer that the removal of Lightning Network support is "down to regulatory issues" and assured users that the service would be restored as soon as possible. However, no specific timeframe was given.

The current situation has left many users in a state of uncertainty, with potential future regulatory developments possibly impacting not only Kraken’s services but other cryptocurrency platforms operating in Germany. Whether or not Kraken will challenge these regulatory issues remains unknown, and the broader implications for other financial service providers dealing with cryptocurrencies under BaFin’s oversight are yet to unfold.

The Rage Article