Kraken Institutional launches first managed crypto yield strategy with Bitwise

Kraken Institutional has launched its first managed investment strategy for clients, partnering with Bitwise Asset Management as the exchange expands beyond custody and trading services.

The new offering, called the Bitwise Custom Yield Strategy, provides eligible institutional clients with access to a professionally managed, yield-focused strategy. Bitwise oversees portfolio management, while Kraken provides custody, execution and risk oversight, according to a statement shared with The Block.

The launch marks Kraken Institutional's first step toward offering a broader lineup of professionally managed crypto strategies through a single platform, rather than requiring institutions to coordinate across multiple custodians, exchanges and asset managers.

Kraken said it expects to add additional strategies and managers over time.

"This offering represents the first of multiple strategies as we build the infrastructure institutions need to access diverse crypto opportunities with confidence," Gurpreet Oberoi, head of Kraken Institutional, told The Block.

A Kraken spokesperson confirmed to The Block that the initial Bitwise Custom Yield Strategy focuses on bitcoin and uses a covered call options approach, selling call options against bitcoin holdings to generate yield.

The strategy also offers a partial buffer against price declines, as option income can offset some losses if bitcoin falls, though gains are capped during sharp rallies.

Many institutions currently hold crypto assets that generate little or no yield, and accessing yield strategies often requires coordination across multiple service providers.

Kraken said its framework allows external managers like Bitwise to operate strategies while assets remain within its custody.