Kraken Launches Kraken Institutional to Target Bitcoin ETF Market
Crypto exchange Kraken has announced the launch of Kraken Institutional, a new division aimed at providing specialized services to institutional clients. This move is part of Kraken’s strategy to establish a strong position in the Bitcoin exchange-traded fund (ETF) market. The division will offer spot and over-the-counter trading, as well as crypto staking for clients outside the United States. It specifically caters to asset managers, hedge funds, and high-net-worth individuals.
Tim Ogilvie Appointed to Lead the New Division
Tim Ogilvie, who joined Kraken through the acquisition of Staked in December 2021, has been chosen to lead the new division. Ogilvie recognizes the rapid pace of institutional adoption in the cryptocurrency industry and attributes some of this growth to the recent approval of Bitcoin ETFs. He notes that institutional adoption of crypto is growing quickly and that the approval of ETFs has fueled broader institutional demand.
Rise of Bitcoin ETFs
In January, nine Bitcoin ETFs were launched, attracting significant attention and resulting in an inflow of $6 billion. These ETFs set a new daily volume record with $2.4 billion. While Grayscale’s ETF experienced outflows, others managed by BlackRock and Fidelity saw substantial inflows.
Competition with Coinbase and Binance
Kraken Institutional aims to compete with Coinbase Institutional and Coinbase Prime, as well as Binance Institutional, by offering tailored solutions for institutional clients. Furthermore, Kraken plans to introduce a “qualified custody” service supported by Kraken Financial, a Wyoming-chartered Special Purpose Depository Institution. This service is part of Kraken’s broader effort to expand its offerings and better compete in the institutional market segment.
Legal Saga with the SEC
Kraken’s launch of Kraken Institutional comes at a time when it is embroiled in a legal dispute with the U.S. Securities and Exchange Commission (SEC). The Chamber of Digital Commerce has intervened in the dispute by filing an amicus curiae brief in support of Kraken. The Chamber argues against the SEC’s approach to regulating the digital asset industry, emphasizing the need for a regulatory framework that promotes innovation while protecting investor interests.
Hot Take: Chamber of Digital Commerce Challenges SEC’s Regulatory Approach
The Chamber of Digital Commerce’s intervention in the legal battle between Kraken and the SEC raises concerns about the SEC’s broad application of securities laws to digital asset transactions. The Chamber believes that this approach is legally flawed and warns that aggressive enforcement actions could hinder blockchain technology’s growth and adoption, potentially impacting both the digital asset market and the broader U.S. economy.
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