Kraken said that the exchange will likely register with the US Securities and Exchange Commission (SEC) as a broker dealer, and then later as an Alternative Trading System. And Coinbase indicated it would follow the same path in April. Poloniex and Bittrex are also reportedly working with the SEC.

Kraken, the second largest U.S.-based exchange by volume, said that it will “probably” register with the US Securities and Exchange Commission (SEC). Kraken CEO Jesse Powell told Bloomberg that the exchange would first register as a broker dealer and then as an alternative trading system (ATS). Any ATS has to be approved by the SEC and then is under its oversight. Being registered as an ATS requires stricter record keeping and demands more transparency, a lacking feature in most Cryptocurrency exchanges.

In March, the SEC released a statement that warned exchanges from trading assets that meet the definition of a security and such exchanges must register with the SEC as a national securities exchange or be exempt from registration. The SEC also recommended that investors who are trading digital assets that are securities should use a platform or entity registered with the SEC, such as a national securities exchange, ATS or broker-dealer. In order to become an ATS, any company first needs to register with the SEC as a broker dealer and join a self-regulatory organization such as the Financial Industry Regulatory Authority (FINRA).

Any trading platform registered with the SEC would have to use strict standards reviewed by the SEC to pick only high-quality digital assets to trade. The SEC would also review the trading protocols that determine how orders interact and execute. The access to a platform's trading services must be the same for all users to meet the standards of an SEC-registered exchange.