• Kraken launches a new division targeting big investors interested in Bitcoin ETFs.
  • Competition heats up among custodians as Kraken challenges Coinbase and Binance.

Cryptocurrency exchange Kraken has unveiled a new division to provide tailored services to institutional investors as it sets its sights on a share of the burgeoning Bitcoin exchange-traded fund (ETF) market.

The move coincides with increased institutional interest in Bitcoin due to the recent approval of ETFs, which has exchanges strategically positioning themselves to take advantage of the rising demand.

Aimed mainly at asset managers, hedge funds, and high-net-worth individuals, Kraken’s recently introduced institutional brand combines its current offers of spot and over-the-counter trading with cryptocurrency staking services. Tim Ogilvie, co-founder of Staked, which Kraken purchased in December 2021, is leading this effort. Ogilvie highlighted the swift expansion of institutional cryptocurrency acceptance, pointing to the recent introduction of an ETF as a spur for more institutional demand.

Entering a competitive market, Kraken Institutional takes on well-established competitors like Coinbase Institutional and Coinbase Prime, which also serve institutional investors. It also has competition from Binance Institutional, which launched tailored solutions for institutional users in the second half of 2022. With the establishment of its institutional division, Kraken has demonstrated its dedication to providing complete services that are customized to meet the changing needs of its institutional clientele.

ETF Approval Sparks Institutional Frenzy:

As previously reported by Crypto News Flash, the recent green light for nine Bitcoin ETFs in the United States has sparked a frenzy among institutional investors. Since their launch in January, these funds have received $6 billion in total inflows; daily inflows have averaged $196 million and have reached a peak of $2.4 billion, as reported by on-chain data firm Arkham Intelligence. The institutional appetite for cryptocurrency investment vehicles is growing, as seen by this exponential increase.

Custodian services are becoming an essential part of the ecosystem as more and more institutions begin investing in Bitcoin ETFs. While Coinbase is now the custodian for eight recently released ETFs, Kraken Financial’s support of Kraken Institutional’s entry into the “qualified custody” market makes it a serious competitor. Competition among custodians is intensifying as Binance Institutional fights for a larger market share, indicating the institutional crypto landscape’s increased emphasis on secure asset storage.

The nine authorized spot Bitcoin exchange-traded funds (ETFs) collectively oversee more than 220,000 BTC, indicating a significant amount of institutional capital investing in these funds. With almost 130,000 BTC under management, BlackRock’s IBIT ETF tops the field. ARK Invest’s ARKB 21Shares is second with 31,465 BTC. The fact that both Bitwise’s BITB and Fidelity’s FBTC have assets above $1 billion demonstrates the large institutional inflows into these products.

Key Players and Holdings

With more than 130,000 Bitcoins under management, or around $7.4 billion, BlackRock’s IBIT ETF is in the lead when it comes to Bitcoin accumulation. BlackRock added 3,281.17 BTC to its address in the last day, indicating it is still bullish. This significant accumulation cements BlackRock’s status as a significant player in the crypto market.

Other players such as Invesco, VanEck, and Franklin Templeton also manage substantial Bitcoin assets through their respective ETFs.  A key instance of Kraken’s role in enabling institutional investments in the cryptocurrency industry is the recent transfer of Bitcoin to Valkyrie’s BRRR fund. Given how much Bitcoin these ETFs have amassed, institutional investors appear to be becoming increasingly acquainted with cryptocurrencies. 

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