Kraken Unveils Wrapped Bitcoin Token kBTC

The American cryptocurrency exchange Kraken is set to launch its own version of wrapped Bitcoin, dubbed kBTC. This was revealed by a platform representative in an interview with CoinDesk.

Initially, the token will be available on the Ethereum blockchain and the L2 network OP Mainnet (Optimism).

Kraken Financial, regulated in the US as a special purpose depository institution, will act as the custodian of the asset backed by digital gold. The exchange will publish the address of a segregated wallet to ensure clients can always verify the full backing of kBTC.

The issuance of ERC-20 standard tokens representing the first cryptocurrency allows Bitcoin holders to engage in decentralized finance.

In this segment, WBTC by BitGo dominates with a capitalization of approximately $9.9 billion. However, following the strategic partnership in August with the Tron-affiliated firm BiT Global, the coin faced certain challenges. The involvement of Justin Sun in the deal raised concerns within the community.

Amidst this, Kraken’s competitor Coinbase promptly announced the launch of its wrapped Bitcoin, cbBTC. In September, the token was introduced on Ethereum and Base networks, with plans to expand operations to Solana.

For kBTC, Kraken has secured support from several partners, including DeFi projects like ParaSwap, Yearn, deBridge, CowSwap, Velodrome, Curve, and Morpho.

A representative of the exchange clarified that a spot market for the token will not be opened. Clients will be able to convert kBTC into Bitcoin and trade the underlying asset.

The minimum deposit for the wrapped coin will be 0.00026 BTC, or about $17 at the time of writing.

Mark Greenberg, Kraken’s Director of Global Asset Development, told CoinDesk that the launch of kBTC is part of the company’s strategy to accelerate the adoption of decentralized finance and dapps.

“We believe in an on-chain future, and DeFi is a key part of this opportunity,” he emphasized.

Back in November 2023, Kraken’s parent companies continued their legal battle with the US Securities and Exchange Commission. The regulator had filed charges for failing to register as a trading platform.

Prior to this, the exchange had settled the Commission’s claims regarding its staking program.