Kraken Launches New Division to Serve Institutional Clients in Bitcoin ETF Market
Kraken, a leading cryptocurrency exchange, has introduced a new division called Kraken Institutional to cater to institutional clients and compete in the growing Bitcoin exchange-traded fund (ETF) market. The division offers a range of services, including spot and over-the-counter trading, as well as crypto staking services for clients outside the United States. Kraken Institutional primarily targets asset managers, hedge funds, and high net-worth individuals.
Tim Ogilvie Leads Kraken Institutional Division
Tim Ogilvie, co-founder of Staked, a company acquired by Kraken in December 2021, has been appointed as the head of the Kraken Institutional division. Ogilvie highlighted the rapid growth of institutional adoption in the crypto space, attributing it partly to the recent approval of Bitcoin ETFs. In a tweet, he expressed excitement about helping partners grow their crypto businesses.
Kraken’s Competition in the Institutional Services Market
Kraken Institutional faces competition from other major players in the institutional services market:
- Coinbase: Coinbase serves as the custodian for eight of the ten newly launched Bitcoin ETFs and is expected to earn significant profits from this role. It established Coinbase Institutional and Coinbase Prime in 2021 to cater to institutional investors.
- Binance: Binance Institutional, launched in mid-2022, provides tailored solutions for institutional users such as asset managers, brokers, hedge funds, family offices, liquidity providers, and proprietary trading firms.
Qualified Custody Service and Legal Battle
Kraken Institutional plans to introduce a “qualified custody” service backed by Kraken Financial, a Special Purpose Depository Institution chartered in Wyoming. This move positions Kraken as a secure custodian for institutional clients seeking reliable storage solutions for their digital assets.
Meanwhile, Kraken is also involved in a legal battle with the Securities and Exchange Commission (SEC). The SEC filed a lawsuit alleging that Kraken’s parent companies were operating its crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency. Kraken has filed to dismiss the case, arguing that allowing it to continue would set a “dangerous precedent” for agency overreach.
Spot Bitcoin ETFs Gain Popularity
Kraken’s launch of the new division comes at a time when spot Bitcoin ETFs are attracting significant interest from institutional investors. These ETFs have seen substantial inflows since their launch in January:
- BlackRock and Fidelity are leading the pack, with approximately $6 billion and $4 billion in assets under management, respectively.
- Ark Invest and Bitwise have also amassed significant investments in spot Bitcoin ETFs.
The daily trading volume of spot Bitcoin ETFs recently reached nearly $2 billion, the highest level since their launch. Last week alone, these ETFs experienced an inflow of approximately $2.3 billion.
In contrast, Gold ETFs have seen a net outflow of funds, possibly due to global investors’ increasing demand for U.S. equity. As of February 14, the leading 14 Gold ETFs have experienced outflows totaling $2.4 billion this year.
Hot Take: Kraken Institutional Aims to Capture Bitcoin ETF Market Share
Kraken’s launch of the new division demonstrates its commitment to serving institutional clients and competing in the Bitcoin ETF market. With its comprehensive range of services and qualified custody offering, Kraken Institutional aims to attract asset managers, hedge funds, and high net-worth individuals seeking secure and reliable crypto solutions. As spot Bitcoin ETFs continue to gain popularity among institutional investors, Kraken is well-positioned to capitalize on this trend and establish itself as a leading player in the market.
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