While nine new bitcoin exchange-traded funds (ETFs) have accumulated over 300,000 bitcoins in assets under management in less than two months, US-based exchange Coinbase has been the main player tasked with acting as gatekeeper for issuers offering these new investment products. However, Coinbase's Californian rival Kraken now seems determined to challenge this status quo. By announcing a new institutional brand, Kraken hopes to mitigate the risk of relying on a single company to provide the vast majority of custodial services for bitcoin ETF issuers.
The need to diversify childcare services
Tim Ogilvie, Institutional Head at Kraken, stressed the importance of diversifying custody services in the face of growing demand for bitcoin ETFs. The recent approval and launch of these ETFs has highlighted the need for a broader range of custody solutions to mitigate the concentration risk associated with reliance on a single custodian. The imminent launch of Kraken Custody is timely in overcoming the potential concentration risk with multi-party custody, diversifying the risks to the ecosystem that relies on a single custodian.
Kraken Institutional: A Strategic Movement
In a bid to usurp Coinbase's dominance as the "single custodian" mentioned by Ogilvie, Kraken is launching Kraken Institutional. The company said the new brand will target financial heavyweights, including institutions, asset managers, hedge funds and high-net-worth individuals. "Institutional adoption of crypto-currencies is growing rapidly," Ogilvie said in a statement on Tuesday. "The recent approval of ETFs has stimulated broader institutional demand; with Kraken Institutional, Kraken is bringing together products and services to meet the needs of institutional clients."
Conclusion
In conclusion, Kraken's introduction of an institutional service into the bitcoin custody market with its new institutional brand represents a bold challenge to Coinbase's dominance as the leading custodian of bitcoin ETFs. By offering diversified custody solutions via Kraken Custody and targeting institutional clients with Kraken Institutional, Kraken is poised to disrupt the traditional custody landscape and offer enhanced options to investors in the burgeoning crypto-currency market.
