- US-based cryptocurrency exchange, Kraken, has rolled out its institutional digital asset custody solution, Kraken Custody, in Australia and the UK.
- Kraken says it’s step one of a global expansion of its institutional custody solution, with plans to introduce it to most markets serviced by its crypto exchange by the end of this year.
US-based crypto exchange, Kraken, has rolled out its institutional services offerings in Australia and the United Kingdom, having previously launched its institutional business unit in the US earlier this year.
The specific service Kraken is introducing to Australian and UK markets is called Kraken Custody offered through Kraken Financial, which is actually a US state-chartered bank based in Wyoming. It’s primarily designed to be used by hedge funds, ETFs and other large institutional customers requiring highly secure and trusted crypto custody solutions.
The introduction of Kraken’s institutional custody solution to Australia and the UK is the first step in the planned global expansion of the exchange’s institutional services. Kraken said custody will become available in most markets serviced by its cryptocurrency exchange by the end of this year, including the European Union, Switzerland, Cayman Islands, and British Virgin Islands.
Related: Kraken Sees Reserves Drop Amid Largest Outflows of BTC and ETH in 8 Years
Kraken Institutional a Response to Demand for Enterprise Grade Custody Services
Kraken launched the institutional arm of its business in the US in March of this year, citing a growing demand for more enterprise-grade crypto custody solutions. At the time of launch, the Head of Kraken Institutional, Tim Ogilvie, said the success of the Bitcoin ETFs had increased the need for more custody options:
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.
Tim Ogilvie, Head of Kraken InstitutionalKraken 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.”
Kraken Custody Is Separate from The Exchange And Regulated As A Bank
Following the FTX debacle of 2022 (and associated collapses), the entire crypto market has become more wary of crypto companies offering to ‘take care’ of their assets for them. Perhaps to counter this wariness, Kraken has structured its custody service in such a way that it’s entirely separate from its exchange business, per a press release on the Kraken website:
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.
Kraken Press ReleaseRelated: Coinbase Partners with US Marshal Service for Enhanced Crypto Custody Solutions
Interestingly, Kraken Financial, which offers the custody service, is a full-blown, US state-chartered bank based in Wyoming, and holds all deposits in full reserve (unlike most banks which hold deposits in fractional reserve).
According to Kraken Financial CEO, Trevor Rutar, this arrangement means Kraken Financial will be among the most tightly regulated crypto custody providers out there:
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.
Trevor Rutar, Kraken Financial CEOCredit: Source link
