The United States-based cryptocurrency exchange, Kraken, has introduced a range of crypto derivatives for Australian institutional customers. This new service is intended to comply with regulations after Kraken's Australian operation, Bit Trade Pty Ltd, recently met regulatory hurdles of the country's financial authority, ASIC.
The newly introduced derivatives offering enables eligible clients to trade crypto futures without directly holding the underlying assets, providing a streamlined way for institutions to engage with the cryptocurrency market. Kraken's derivatives feature multi-collateral support, allowing clients to use fiat currencies, stablecoins, or cryptocurrencies as collateral. This flexible collateralization is securely managed within Kraken's custodial framework, which supports over 200 assets.
Jonathon Miller, Kraken's General Manager for Australia, emphasized that the derivatives product addresses the rising demand for secure, compliant trading solutions. He noted that institutional clients, who generally seek sophisticated trading options, can leverage this regulated product to implement advanced strategies. This product differentiates Kraken from other exchanges by focusing on security and regulatory alignment, which are increasingly critical in Australia's financial landscape.
Kraken launched this derivatives suite after a recent Federal Court ruling against Bit Trade, citing compliance lapses with ASIC's guidelines. The court found that Bit Trade's margin trading product lacked a target market determination, a necessary compliance measure under Australia's Corporations Act, aimed at protecting consumers from potential risks. This ruling has underscored the need for exchanges to enhance compliance measures in an environment where regulations are still forming.
Clients can qualify for Kraken's new derivatives products by having a minimum net asset value of AUD $2.5 million (USD $1.64 million) and a gross annual income of AUD $250,000 ($164,000) for the past two financial years. This threshold restricts the service to institutional and high-net-worth individuals, aligning with regulatory standards for wholesale markets.
In response to the Federal Court's ruling, Kraken highlighted Australia's lack of regulatory clarity, stating that the crypto market faces "confusing and uncertain" guidelines.
Kraken has called for more explicit regulatory frameworks tailored to crypto assets, underscoring that current ambiguities challenge service providers and investors. Eligible clients can now access the derivatives service through Kraken's support page while existing users can verify their eligibility via the Kraken Pro app.