Ripley emphasized that the introduction of these spot Bitcoin ETFs is a net positive for Kraken and the cryptocurrency industry.
Kraken, as a US-based cryptocurrency exchange, has earned a reputation for regulatory compliance. It is registered as a money services business with the Financial Crimes Enforcement Network (FinCEN) and is supervised by the Wyoming Division of Banking.
Considered as one of the leading cryptocurrency exchanges, Kraken announced months ago its plans to enter the stock and ETF market in the United States and the United Kingdom starting in 2024. This marks the first time that Kraken has ventured beyond the cryptocurrency space. cryptocurrencies after more than a decade of operations focused on this sector.
On January 16, Kraken CEO David Ripley spoke with Sonali Basak and Katie Greifeld on “Bloomberg Crypto” about the impact of the recently approved Bitcoin spot ETFs on Kraken and the broader cryptocurrency industry.
Bitcoin ETFs Seen as a Positive Development
Ripley laid out several reasons for this positive outlook. First, Kraken benefits directly from these ETFs, as the company provides the index for six of the eleven Bitcoin spot ETFs that were approved. This relationship positions Kraken as a key player in the ETF ecosystem.
Secondly, Ripley sees these ETFs as another access point for people to enter the cryptocurrency space, aligning with Kraken’s mission to increase cryptocurrency adoption and achieve financial freedom.
Impact on Kraken’s Business Model
Ripley addressed the potential impact of these spot Bitcoin ETFs on Kraken’s business model. He acknowledged that while some people new to crypto might initially opt for an ETF instead of platforms like Kraken or Coinbase, this is not a concern.
Kraken offers a wide range of features and services, including over 200 tokens and several functionalities that ETFs do not offer. In particular, Kraken allows users to hold Bitcoin and custody it themselves, which he says is a significant advantage over ETFs.
Rates and Pricing Strategy
Regarding fees and pricing structure, Ripley clarified that Kraken does not plan to adjust its fees in response to the introduction of spot Bitcoin ETFs. He explained that Kraken’s offerings are sufficiently different from ETFs that they are not direct substitutes. Therefore, the different prices of these products are justified by their different nature.
Custody and Business Expansion Services
Ripley also discussed Kraken’s upcoming launch of its custody product, which he sees as a significant development for the company. He believes that for many clients there is a synergy between finding liquidity and custody services in one place. However, it also acknowledged that some companies might choose alternative escrow providers or even self-custody.
Ripley highlighted Kraken’s long-standing reputation for security as a key differentiator in the custody market. He referred to Kraken as a security company with an integrated exchange, emphasizing the company’s strong focus on security features and functionalities.
Use of Banking License for Diversification
In terms of diversifying into financial services, Ripley mentioned Kraken’s special purpose depository institution license with the state of Wyoming. This novel license includes specific crypto regulations that are beneficial to customers, particularly when it comes to events like forks. Ripley sees this as an additional advantage that Kraken can offer potential custody clients.
By Audy Castaneda
