Kraken, a leading cryptocurrency exchange based in the United States, is reportedly contemplating an expansion into the trading of traditional financial assets, including stocks and exchange-traded funds (ETFs). Unnamed sources cited by Bloomberg suggest that the exchange aims to introduce these services in both the United States and the United Kingdom by 2024. If this move comes to fruition, Kraken would become the first cryptocurrency exchange to diversify its portfolio beyond digital assets.
The endeavor is reportedly being led by Kraken Securities, a newly formed division within the company. This unit has already obtained the required regulatory clearances in the U.K. and is in the process of securing similar approvals in the U.S. While Kraken declined to confirm these plans, a spokesperson for the company emphasized their ongoing efforts to “power the global adoption of cryptocurrencies” and to “broaden and enhance” their service offerings.
Kraken’s expansion plans are noteworthy, especially considering the regulatory challenges it has faced in the U.S., including a $30 million fine imposed by the Securities and Exchange Commission (SEC). Despite these setbacks, the exchange has been strategically growing its international presence. It recently secured a virtual asset service provider registration in Spain, enabling it to offer cryptocurrency exchange and custodial services to Spanish residents.
The company’s growth strategy comes at a time of increased regulatory scrutiny and declining trading volumes in the cryptocurrency sector. Despite these headwinds, Kraken has successfully increased its market share this year, largely at the expense of Binance, which has been grappling with its own set of regulatory issues.
Kraken’s entry into traditional financial markets would place it alongside existing zero-commission platforms such as Robinhood and Public.com. Kraken aims to differentiate its services by offering customers a unified portfolio that includes crypto, stocks, and ETFs, according to sources familiar with the matter.
As part of its diversification strategy, Kraken is also developing prime brokerage services and a qualified custodian for institutional clients. These services are expected to operate separately from the exchange and are currently awaiting regulatory approval in the state of Wyoming.
As of now, neither the Financial Conduct Authority in the U.K. nor the Financial Industry Regulatory Authority in the U.S. have commented on Kraken’s pending applications. Should Kraken’s ambitious plans materialize, it could significantly alter the digital asset trading landscape by more closely integrating it with traditional financial markets.
