Kraken, a leading cryptocurrency exchange, has recently announced the establishment of a new division dedicated to catering to the needs of institutional players in the crypto market. Launched on February 27th, the new brand encompasses existing corporate offerings, including spot trading and over-the-counter (OTC) deals, alongside crypto staking services aimed at non-U.S. clients such as asset managers, hedge funds, and wealthy individuals. This move signals Kraken’s strategic expansion into the Bitcoin ETF ecosystem.
Kraken Targets Institutional Adoption Surge
At the helm of Kraken’s institutional division is Tim Ogilvie, co-founder of Staked, who joined Kraken after its acquisition. Ogilvie underscores the rapid uptake of cryptocurrencies among institutional investors, further accelerated by the recent sanction of ETFs, which has triggered wider institutional interest.
Since their inception in January, the nine new Bitcoin ETFs have collectively attracted $6 billion, averaging an inflow of $196 million daily. Notably, they set a new record with a $2.4 billion trading volume in a single day. While Grayscale’s ETF faced significant outflows, ETFs from BlackRock and Fidelity saw substantial inflows, offsetting this trend. With Coinbase currently acting as the custodian for the majority of these new ETFs, Kraken is poised to capture a share of this burgeoning market.
Kraken’s Custodial and Competitive Edge
In a recent blog, Ogilvie revealed Kraken Institutional’s plans to introduce a qualified custody service backed by Kraken Financial, a Wyoming-based Special Purpose Depository Institution. This service aims to provide secure and compliant asset storage for institutional clients.
Kraken Institutional’s launch puts it in direct competition with established players like Coinbase Institutional and Coinbase Prime, which have been servicing institutional investors since 2021. Additionally, Kraken’s new division is positioning itself against Binance Institutional, which started offering tailored institutional solutions in mid-2022.