Chamber of Commerce intervenes in SEC lawsuit while Kraken introduces innovative institutional division
Kraken, the cryptocurrency exchange, recently unveiled Kraken Institutional, a new division dedicated to providing specialized services to institutional clients. This strategic move is aimed at solidifying Kraken’s position in the Bitcoin exchange-traded fund (ETF) market. Kraken Institutional will bring together the exchange’s existing institutional services, including spot and over-the-counter trading, as well as crypto staking for clients outside the United States. The division is specifically designed to cater to asset managers, hedge funds, and high-net-worth individuals.
To lead the new division, Tim Ogilvie, who joined Kraken through the acquisition of Staked in December 2021, has been appointed. Ogilvie emphasized the rapid pace of institutional adoption in the cryptocurrency sector, attributing part of this growth to the recent approval of Bitcoin ETFs. He noted that institutional adoption of crypto is expanding rapidly and that the approval of ETFs has sparked broader institutional demand.
The launch of nine Bitcoin ETFs in January garnered significant attention, with a total inflow of $6 billion, resulting in an average daily inflow of $196 million. These ETFs also set a new daily volume record, reaching $2.4 billion. While Grayscale’s ETF experienced outflows, others, particularly those managed by BlackRock and Fidelity, attracted substantial inflows.
Coinbase, acting as the custodian for eight of the ten newly launched Bitcoin ETFs, is expected to experience significant earnings growth. Kraken’s institutional services division aims to compete with Coinbase Institutional and Coinbase Prime, as well as Binance Institutional, which offers tailored solutions for a similar clientele.
Kraken Institutional also plans to introduce a “qualified custody” service, supported by Kraken Financial, a Wyoming-chartered Special Purpose Depository Institution. This service will be part of Kraken’s broader efforts to expand its offerings and effectively compete in the institutional market segment.
The launch of Kraken Institutional comes amidst a recent development in the legal battle between Kraken and the U.S. Securities and Exchange Commission (SEC). The Chamber of Digital Commerce has intervened in the dispute by submitting an amicus curiae brief in support of Kraken. This move by the Chamber challenges the SEC’s approach to regulating the digital asset industry.
The brief argues against the SEC’s attempts to enforce regulations without clear legislative authority, emphasizing the necessity of a regulatory framework that promotes innovation while safeguarding investor interests.
The Chamber of Digital Commerce’s filing raises concerns about the SEC’s broad application of securities laws to digital asset transactions, asserting that such an approach is legally flawed. The trade body warns that the SEC’s aggressive enforcement actions could hinder the growth and adoption of blockchain technology, potentially impacting the digital asset market and the broader U.S. economy.
