Kraken, a well-established player in the crypto exchange arena, is setting its sights on new horizons beyond digital assets. Founded in 2011, Kraken has not only withstood the test of time but has also demonstrated resilience in the face of numerous market fluctuations. The company is embarking on a bold journey into traditional finance, with plans to introduce equity trading services in the United States and the United Kingdom.
Kraken Securities: Paving the Way for Equity Trading
This ambitious expansion effort is facilitated by establishing a dedicated Kraken Securities division within Kraken. The primary objective of this division is to facilitate trading US-listed stocks and crypto exchange-traded funds (ETFs). This strategic shift represents a significant departure from Kraken’s roots in the cryptocurrency domain, signaling the company’s commitment to diversification and adaptation.
In anticipation of this venture, Kraken has proactively secured the required regulatory permits in the United Kingdom. Additionally, the company has taken the essential step of applying for a broker-dealer license from the Financial Industry Regulatory Authority (FINRA) in the United States. While the exact launch date is still on the horizon, Kraken targets a 2024 debut for its groundbreaking equity trading service.
Adapting to Market Dynamics: Navigating the “Crypto Winter”
The decision to venture into the equities market underscores the evolving dynamics of the cryptocurrency industry. Following Bitcoin’s remarkable ascent, whose value nearly touched $69,000, the crypto market experienced a phenomenon known as the “crypto winter.”
This prolonged downturn dampened trading volumes and diminished the industry’s allure. Kraken’s CEO, Dave Ripley, recognized the need to adapt to the changing market conditions and seize new opportunities.
Challenges in a Competitive Landscape
It’s essential to acknowledge that entering the equities market presents its own set of challenges. Kraken will compete against well-established zero-commission platforms like Robinhood Markets Inc. and Public.com, which have already made inroads into the market. Furthermore, the surge in retail trading sparked by the Covid-19 pandemic has subsided.
Public.com, for instance, expanded its operations into the UK earlier this year, while Robinhood plans to introduce its brokerage services to UK residents soon.
Once Kraken’s stock trading service goes live, eligible customers will receive invitations to activate this feature. This approach aims to streamline the user experience by presenting crypto holdings, stocks, and ETFs as part of a unified portfolio, offering greater convenience and accessibility to users.
Expanding Service Offerings
In addition to its equity trading ambitions, Kraken is diligently expanding its prime brokerage services. Moreover, the company is on the verge of launching a qualified custodian service tailored for institutional clients. This custody service will operate independently from the crypto exchange, and Kraken has formally applied for approval with the state of Wyoming.
A Bright Future Ahead
While Kraken’s expansion endeavors are undoubtedly gaining momentum, it’s worth noting that the company has achieved notable market share growth this year, even amidst declining trading volumes. This growth has come at the expense of industry giant Binance, which has faced heightened regulatory scrutiny on a global scale. According to CCData, Kraken’s share of global spot trading has reached 3.5%, marking its highest level since 2018.
As Kraken embarks on this new chapter of its journey, cryptocurrency enthusiasts and traditional investors will closely monitor the company’s actions and successes in the equities market. With its track record of resilience and adaptability, Kraken is poised to make a meaningful impact on the ever-evolving landscape of financial markets, bridging the gap between the world of digital assets and traditional investments.
