Kraken Launches Institutional Services Division to Compete for Bitcoin ETF Market Share

Kraken has unveiled a new division dedicated to providing services to institutional clients as it seeks to gain a foothold in the Bitcoin exchange-traded fund (ETF) market. In a recent blog post, the exchange said the newly-formed Kraken Institutional brand incorporates its existing institutional offerings, including spot and over-the-counter trading, as well as crypto staking services (for clients outside the United States). The division primarily targets asset managers, hedge funds, and high net-worth individuals.

Tim Ogilvie to Lead Kraken Institutional Division

Tim Ogilvie, co-founder of Staked, a company acquired by Kraken in December 2021, will lead the Kraken Institutional division. In a statement, Ogilvie emphasized the rapid growth of institutional adoption in the crypto space and attributed it, in part, to the recent approval of Bitcoin ETFs. 

Kraken Institutional is open for business! Excited to help our partners grow their crypto businesses! https://t.co/eV5zU3nR5v

— Tim Ogilvie (@Tim_Ogilvie) February 27, 2024

Coinbase, which serves as the custodian for eight of the ten newly launched Bitcoin ETFs, is expected to reap substantial earnings in the coming year. 

With its new institutional services division, Kraken aims to compete with Coinbase Institutional and Coinbase Prime, which were established in 2021 to cater to institutional investors.

Kraken Institutional also faces competition from Binance Institutional, launched in mid-2022, which provides tailored solutions for institutional users such as asset managers, brokers, hedge funds, family offices, liquidity providers, and proprietary trading firms.

In the blog post, Ogilvie outlined Kraken Institutional’s plans to introduce a “qualified custody” service, backed by Kraken Financial, a Special Purpose Depository Institution chartered in Wyoming. 

The move positions Kraken as a secure custodian for institutional clients seeking reliable storage solutions for their digital assets.

Meanwhile, the exchange has also recently filed to dismiss the Securities and Exchange Commission lawsuit saying that allowing this case to continue would set a “dangerous precedent.” 

The SEC alleged in November that the exchange’s parent companies were operating Kraken’s crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency.

By allowing this case to continue sets a “dangerous precedent for agency overreach,” said Kraken in a blog post. 

The exchange stressed that the SEC never pointed to any “contract” between buyers on Kraken and token issuers, so there can’t be an “investment contract.”

Spot Bitcoin ETFs See Significant Inflows

Kraken’s move to launch the new division comes as spot Bitcoin ETFs have gained momentum among institutional investors. In fact, the spot Bitcoin ETFs launched in January have attracted billions of dollars amid the cryptocurrency’s rally.Industry giants like BlackRock and Fidelity lead the pack, amassing approximately $6 billion and $4 billion, respectively, followed by Ark Invest and Bitwise.Earlier this week, daily spot Bitcoin ETF trading volume amounted to nearly $2 billion, the highest level since the first day of trading on January 11.As reported earlier, spot Bitcoin ETFs witnessed a substantial influx of approximately $2.3 billion last week, nearly doubling the previous week’s inflow of $1.2 billion.It is worth noting that there has been a net outflow from Gold ETFs, possibly driven by global investors’ growing demand for U.S. equity.So far this year, the leading 14 Gold ETFs have experienced outflows of $2.4 billion in 2024 as of February 14.