Kraken launches crypto derivatives trading for UK professional investors in latest expansion for the firm

Crypto exchange Kraken has launched derivatives trading in the United Kingdom, the company’s second-largest market. The product is available only to "Professional Clients," as defined by the U.K. Financial Conduct Authority.

Kraken began "quietly" rolling out the offering in recent weeks, according to Alexia Theodorou, Kraken’s head of derivatives.

"As a new product, we rolled it out gradually just to make sure that  it reached a few specific clients first," she said. "Now it's open to 100% of our clients who need to go through a specific onboarding process for derivatives."

Derivatives represent roughly 70% to 75% of total crypto trading volume, Theodorou said. While derivatives and spot volumes are "currently on par" on Kraken, she added that "crypto derivatives are growing at a faster pace than spot," in general.

"That's why we are doubling down on derivatives, given the trends and ratios that we see as more and more institutional clients are entering the space," said Theodorou. "We see it as a big investment from our end in the UK, given how important the UK is for Kraken. Opening up our flagship derivatives product to eligible UK clients is a big thing for us."

The derivatives will be offered through the Kraken Multilateral Trading Facility (MTF), a regulated platform operated by Crypto Facilities, which became the first crypto firm to secure an MTF license from the FCA in 2020. Access will be provided through Kraken’s futures broker in Bermuda.

Kraken acquired Crypto Facilities in 2019 in a deal valued at over $100 million. The firm offers a number of exotic products, including multi-collateral perpetual contracts, which Kraken was the first to offer.

These contracts are “a very capital efficient way of trading for institutional clients,” Theodorou said. “It gives them the ability to trade using many collaterals and leverage, but also gives them the ability to start trying out more strategies with their spot trading, be it hedging or any other market neutral strategies that they might want to execute.”

Theodorou said that it’s early days for crypto derivatives and that in equities markets, derivatives often represent 10 to 15 times more trading volume than spot. A lot of this comes down to bespoke geographical regulations, which have so far prevented Kraken from expanding into major markets like the U.S., Korea, and even some European countries. 

“Even though the spot crypto market only now is starting to get regulated with MICA and other jurisdictions across the world, derivatives have always been regulated,” Theodorou said. “There are specific licenses that you need to hold to open up to specific countries.”

Kraken has recently acquired a MiFID II entity in Cyprus and U.S.-based NinjaTrader, paving the way for future expansion of its derivatives offering in those regions. The firm has also moved beyond crypto by adding U.S. equities trading to its mobile and web platforms.

“It's a matter of priority then on what other jurisdictions we want to start offering this regulated product through our licensing efforts,” Theodorou said.

Kraken, which is reportedly looking to go public, generated $1.5 billion in revenue in 2024.