In a strategic move to deepen its foothold in the rapidly growing institutional cryptocurrency market, Kraken, one of the world’s leading crypto exchanges, announced the launch of a new division tailored specifically for institutional clients. Named Kraken Institutional, this new branch was unveiled on February 27, encompassing a suite of services that includes spot and over-the-counter trading, as well as crypto staking options for clients outside the United States. This initiative is targeted at attracting a diverse group of institutional investors, including asset managers, hedge funds, and affluent individuals.
The formation of Kraken Institutional marks a significant milestone in the company’s evolution, leveraging its existing institutional offerings to create a more focused and dedicated service model. The move comes at a time when institutional interest in cryptocurrencies is experiencing unprecedented growth, fueled in part by the recent approval of Bitcoin exchange-traded funds (ETFs). Tim Ogilvie, co-founder of Staked, which Kraken acquired in December 2021, has been appointed to lead the new division. Ogilvie highlighted the rapid pace of institutional crypto adoption and pointed to the approval of Bitcoin ETFs as a catalyst for increased institutional demand.
Since their introduction in January, the nine new Bitcoin ETFs have collectively attracted $6 billion in investments, averaging a daily inflow of $196 million. They have also set a new daily trading volume record of $2.4 billion. Notably, while Grayscale’s ETF experienced significant outflows, other funds, particularly those managed by BlackRock and Fidelity, have seen substantial inflows, helping to sustain the market’s momentum.
Kraken’s move into the institutional arena is seen as an attempt to capture a share of the lucrative ETF market, which has also benefited competitors like Coinbase. Coinbase serves as the custodian for eight of the ten recently launched Bitcoin ETFs, positioning it for potentially strong earnings in the coming year. Kraken Institutional aims to compete directly with Coinbase Institutional and Coinbase Prime, as well as Binance Institutional, which offers bespoke services to institutional clients.
The launch of Kraken Institutional includes the introduction of a “qualified custody” service, supported by Kraken Financial, a Wyoming-chartered Special Purpose Depository Institution. This development positions Kraken as a formidable competitor in the institutional crypto services sector, challenging established players and providing comprehensive solutions tailored to the sophisticated needs of institutional investors.
