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Kraken Launches Institutional Services In Australia & UK After Successful Debut In US

2024/07/22By:

The United States-based cryptocurrency exchange Kraken has extended its reach to Australia and the United Kingdom with the rollout of its institutional services, following the establishment of its institutional business unit in the US earlier this year.

The specific offering for these markets is Kraken Custody, facilitated by Kraken Financial, a Wyoming-based bank chartered by the US government. Kraken Custody is primarily targeted at hedge funds, ETFs, and other substantial institutional clients who necessitate highly secure and dependable cryptocurrency custody solutions.

The introduction of Kraken’s institutional custody service in Australia and the UK signifies the inaugural step towards the company’s ambitious global expansion plan for its institutional services. Kraken anticipates that by the end of this year, custody services will be accessible in the majority of the markets served by its cryptocurrency exchange, encompassing the European Union, Switzerland, Cayman Islands, and British Virgin Islands.

Kraken Institutional: A Timely Response to the Soaring Demand for Enterprise-Level Custody Services

In March of this year, Kraken responded to the escalating demand for enterprise-grade crypto custody solutions by launching the institutional segment of its business in the United States. At the time of the launch, Tim Ogilvie, the Head of Kraken Institutional, emphasized that the success of Bitcoin ETFs had further intensified the necessity for a wider array of qualified custodians：

Custody has always been integral to the institutional crypto space and the recent success of the Bitcoin ETFs has only underscored the need for a broader range of qualified custodians.

Kraken says its custody solution does more than just allow institutions to safely store digital assets, claiming in a blog post that Kraken Custody “marries cutting-edge security protocols and role-based access controls with seamless integration to the rest of the Kraken product suite.”   He added that in addition to custody, it also allows institutions to “manage and scale their strategies.”

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Kraken Custody: A Stand-Alone, Bank-Regulated Service Separate from the Exchange

Amid the aftermath of the FTX crisis in 2022 and the subsequent collapses, the crypto market has grown increasingly cautious of firms offering asset custody services. In an effort to alleviate such concerns, Kraken has designed its custody service to operate independently from its exchange business, as highlighted in a Kraken website press release:

Kraken Financial is a segregated entity, where funds and assets are held remote from Kraken and are available for withdrawal at all times.  Kraken Financial offers a familiar structure for clients coming from traditional finance looking to enter the digital asset class, with the safety and security they expect from a regulated financial institution.
Remarkably, Kraken Financial, the provider of this custody service, is a fully-fledged, US state-chartered bank located in Wyoming. It operates with a full reserve system for all deposits (contrasting with the fractional reserve model employed by most banks).
Trevor Rutar, CEO of Kraken Financial, emphasizes that this setup positions Kraken Financial as one of the most tightly regulated crypto custody providers:

Under the supervision of the Wyoming Division of Banking, Kraken Financial will be subject to some of the most rigorous security and operational checks of any crypto custodian.  This makes Kraken Financial the ideal entity to offer custody in line with what institutions need to engage in the crypto asset-vertical.

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