Kraken allows crypto assets to be used as collateral for derivatives in the EU

Cryptocurrency exchange Kraken has announced that European traders can now use crypto assets as collateral on its MiFID-regulated derivatives platform. This move expands Kraken's operations in the EU, as the platform previously only supported fiat collateral.

Kraken has obtained a MiCA license issued by the Central Bank of Ireland and has been approved as a MiFID entity in Cyprus and as a multilateral trading facility (MTF) by the UK's Financial Conduct Authority (FCA) to offer derivatives trading and global liquidity support to EU users. Kraken's strategy allows European traders to use crypto assets as collateral within a regulated framework, while adjusting the collateral ratio based on asset volatility and automatically converting the value of crypto assets into USD for margin and settlement calculations. Kraken stated that this new option primarily meets the needs of institutional clients and is expected to enhance order book liquidity.