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Chamber of Commerce intervenes in SEC lawsuit as Kraken launches new institutional division

Cryptocurrency exchange Kraken made headlines on February 27th with the launch of Kraken Institutional, a new division tailored to serving institutional clients. With a strategic focus on bolstering its presence in the Bitcoin exchange-traded fund (ETF) market, Kraken Institutional combines a range of specialized services to cater to the unique needs of asset managers, hedge funds, and high-net-worth individuals.

The consolidated offering includes spot and over-the-counter trading, as well as crypto staking for clients outside the United States. This move reflects Kraken’s commitment to addressing the increasing demand from institutional investors looking to gain exposure to the burgeoning cryptocurrency market.

At the helm of Kraken Institutional is Tim Ogilvie, who assumed leadership following Kraken’s acquisition of Staked in December 2021. Ogilvie emphasized the rapid pace of institutional adoption within the cryptocurrency sector, attributing much of this momentum to the recent approval of Bitcoin ETFs. He underscored the growing interest from institutional players in the crypto space, citing the approval of these ETFs as a significant catalyst for broader institutional involvement.

In January, the launch of nine Bitcoin ETFs garnered significant attention, with a combined inflow of $6 billion and a record daily volume of $2.4 billion. While certain ETFs saw outflows, those managed by industry giants like BlackRock and Fidelity experienced substantial inflows. This trend is indicative of the increasing institutional interest and confidence in the cryptocurrency market.

As pioneers in the digital asset custodianship space, Coinbase stands out as the custodian for eight of the ten newly launched Bitcoin ETFs. This strategic positioning is expected to drive significant earnings growth for Coinbase, further solidifying its position in the institutional market segment. Kraken Institutional’s entry into this space sets the stage for healthy competition with established players like Coinbase Institutional and Coinbase Prime, as well as Binance Institutional.

One key offering that Kraken Institutional aims to introduce is a “qualified custody” service, supported by Kraken Financial, a Wyoming-chartered Special Purpose Depository Institution. This service aligns with Kraken’s broader strategy to diversify its service portfolio and enhance its competitiveness in the institutional market.

The rollout of Kraken Institutional coincides with ongoing legal battles between Kraken and the U.S. Securities and Exchange Commission (SEC). The Chamber of Digital Commerce, a leading trade organization, has intervened in support of Kraken by filing an amicus curiae brief. This proactive stance challenges the SEC’s regulatory approach to the digital asset industry and advocates for a more innovation-friendly regulatory framework.

The Chamber’s filing raises concerns about the SEC’s broad interpretation of securities laws in the digital asset space, cautioning against regulatory overreach that could stifle technological progress and impede market growth. The tensions between regulators and industry stakeholders underscore the need for clear and balanced regulations that protect investors while fostering innovation.

Overall, Kraken Institutional’s launch marks a significant milestone in the evolution of the cryptocurrency market, signaling the increasing institutional acceptance and participation in this rapidly growing ecosystem. By offering tailored services and embracing regulatory challenges head-on, Kraken positions itself as a key player in the institutional crypto landscape, poised for further growth and success.

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