Kraken now allows crypto collateral for futures trading in the EU. Consequently, this regulated move boosts European capital efficiency.
Crypto exchange Kraken will now allow traders to post cryptocurrencies as collateral. This is a key feature of its MiFID-regulated derivatives platform in the European Union. As a result, this pre-empts Kraken Pro as the first regulated venue. The statement was made by Alexia Theodorou, Director of Derivatives at Kraken.
Regulated Platform Enhances Capital Efficiency for EU Clients
In particular, this move efficiently completes the exchange’s offerings in the EU. The exchange spearheaded derivatives trading in the bloc in May. In addition, this new service will help cement Kraken’s position. Its target is to become the “biggest European perpetual offering,” according to Theodorou.
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As a result, all Kraken Pro customers in the European Union can use crypto as collateral. They can use BTC, ETH, and some stablecoins for this purpose. Moreover, this collateral can be used to trade more than 150 perpetual futures markets. Thus, this provides more flexibility and speed to clients instantly.
This development makes Kraken Pro one of the first regulated platforms in Europe. In addition, it provides crypto-collateralized perpetual futures contracts. Thus, clients are able to achieve a higher capital efficiency. They do so fully in line with Europe’s high regulatory standards.
Finally, the growth of crypto as collateral also offers greater access to trade. Clients can now make better futures trading strategies. This directly addresses their individual financial goals. Therefore, Kraken proves to be committed to a regulated and innovative platform.
MiFID Compliance and Strategic Licenses Bolster Market Position
As such, trading on crypto collateral brings a new level of efficiency for all users. Specifically, this benefit is offered to both institutions and individuals. Digital assets, in contrast to the conversion of crypto to fiat, are used directly. Therefore, clients are now able to easily use the value of BTC and ETH.
In addition, this enables them to enter leveraged futures positions quickly. In addition, this makes capital unlock faster. Traders can also use this to hold their underlying crypto exposure in an efficient way. They can use crypto to post as collateral for USD-margined perpetual futures contracts.
Additionally, this approach circumvents all fiat conversion fees and delays. Thus, traders can trade much faster in volatile markets. In addition, they can hedge and diversify across assets. This is done via a single account easily. As a result, the capability generates capital efficiency through cross-asset leverage.
Theodorou verified widespread interaction with regulators. In particular, this involves the local regulator CySEC. Moreover, it will entail participation at the ESMA level. This is to make it comfortable with perpetual futures classification. They inform the regulators of this exchange-traded product.
Further, Kraken’s approach is to hold several important licenses. As a result of this, the exchange was granted a MiCA license by the Central Bank of Ireland. In addition to this, it has a MiFID-regulated entity in Cyprus. It also gained the approval of the UK’s Financial Conduct Authority for MTF. Hence, these licenses are critical to scale perpetual trading across Europe.
Overall, this strategic growth ensures that clients’ capital works more effectively. As a result, it accommodates both individual traders and institutions. Every institution can benefit from optimizing trade execution and treasury strategies. Thus, this move bolsters Kraken’s position in the advanced European derivatives market.