Nine new spot bitcoin exchange-traded funds have amassed more than 300,000 bitcoin in assets under management in less than two months. And so far, U.S.-based Coinbase has been the principal cryptocurrency exchange entrusted to serve as custodian for the issuers offering these new investment products.

But now Kraken, Coinbase's California-based rival, appears keen to challenge the status quo.

While announcing a new institutional brand on Tuesday, Kraken said it wants to alleviate the risk of relying on one company to provide the vast majority of custodial services to spot bitcoin ETF issuers.

"The approval and subsequent launch of the bitcoin ETFs have only underscored the need for a broader range of custody solutions," Kraken's Head of Institutional, Tim Ogilvie, told The Block. "The upcoming launch of Kraken Custody is well-timed to overcome potential concentration risk with multi-party custody, diversifying the risk of the ecosystem relying on a single custodian."

Custodians play a key role in the budding spot bitcoin ETF market as they safeguard the billions of dollars worth of bitcoin the ETFs own. Earlier this month, Coinbase CEO Brian Armstrong told analysts during an earnings call that "We won eight of 11 spot Bitcoin BTC -2.085% custody mandates from issuers, and today Coinbase Custody is about 90% of the $36 billion in Bitcoin ETF assets as a result."

Disrupting Coinbase's dominance

Seeking to usurp Coinbase — the "single custodian" Ogilvie referenced — Kraken is launching Kraken Institutional. The company said the new brand will cater to financial heavy hitters including institutions, asset managers, hedge funds and high net-worth individuals. 

"Institutional adoption of crypto is growing rapidly,” Ogilvie said in a statement Tuesday. "The recent ETF approval has spurred broader institutional demand; with Kraken Institutional, Kraken is pulling together products and services to meet the needs of institutional clients."

As of the end of last week there was nearly $40 billion in assets under management among spot bitcoin ETFs, according to CoinShares. On Monday, the daily volume for the nine new ETFs set a new record when daily trading volume surpassed the buying and selling activity seen on the first day the instruments began trading.

Courting 'new entrants' to institutional crypto

While Ogilvie stressed the benefits of not falling victim to a market controlled by a single custodian, he also teased that Kraken's strategy is driven by a desire to woo institutional customers who have yet to enter the market. 

"The diversification of the institutional market to include more types of asset managers makes this a timely development, particularly as the institutional adoption of crypto is expected to grow rapidly," Ogilvie said to The Block. "This is therefore less about grabbing existing market share and more about preparing the ground for new entrants as they start to engage in the digital-asset class."