Kraken Launches Wrapped Bitcoin (kBTC): Details

Kraken, one of the leading cryptocurrency exchanges, is launching its wrapped Bitcoin (BTC) token, kBTC. According to the exchange, this new token will be available on Ethereum (ETH) and the OP Mainnet. It will be backed 1:1 with actual Bitcoin held in reserve by Kraken. 

The Concept Behind the Kraken kBTC

The introduction of kBTC allows Bitcoin holders to use their assets across Ethereum’s Decentralized Finance (DeFi) ecosystem and Optimism’s Layer 2 scaling solution. That way, they won’t sell or convert their Bitcoin. Kraken has confirmed that key partners for kBTC will include Ethereum, Optimism, Paraswap, Curve, Morpho, Kraken, and Kraken Wallet, amongst others. 

These partnerships offer a seamless DeFi experience, allowing users to lend, borrow, and trade kBTC across various blue-chip platforms. Bitcoin will be held in a secure wallet at Kraken Financial, the exchange’s U.S. custody solution. The wallet will be separate from others, and its address will be public so customers can verify that the Bitcoin is fully reserved. Notably, there will be no supported spot markets for kBTC at launch.

The minimum deposit size for kBTC is 0.00026 BTC, approximately $15 at a Bitcoin price of $60,000. This low minimum makes it accessible to a wider audience of users. The launch of kBTC is part of a larger trend where exchanges like Kraken offer users more flexible, cross-chain solutions. Likewise, Kraken’s kBTC will provide Bitcoin holders new avenues to unlock liquidity and use BTC as collateral for DeFi services. 

Kraken Takes Steps to Align Its Operation

Recall that the exchange encountered a legal challenge in Australia. Just recently, an Australian Federal Court ruled in a lawsuit brought by the Australian Securities and Investments Commission (ASIC). The lawsuit was centered around Kraken’s offering its Magic Extension Product to Australian retail investors, particularly focusing on providing margin trading services. 

Furthermore, the court made a key distinction regarding Kraken’s margin trading offerings in cryptocurrency. In response to the court’s ruling, Kraken Exchange took immediate steps to align its operations with the legal requirements. The exchange has moved to restrict margin trading in fiat currency for Australian clients. It has limited such service to wholesale investors or clients who meet specific criteria.

Coinbase Links BTC to ETH With Wrapped BTC Token

Last month, Coinbase unveiled its Wrapped Bitcoin token, cbBTC, after much anticipation. This fresh digital offering was rolled out on the Base Ethereum Layer-2 blockchain. This progress demonstrates Coinbase’s commitment to offering greater flexibility for crypto traders seeking entry into the Ethereum ecosystem while retaining their Bitcoin holdings.

Coinbase disclosed that this new digital product pegged to Bitcoin on a 1:1 ratio, is designed to bridge the gap between Bitcoin and DeFi applications. Furthermore, it was revealed that cbBTC will function on the Ethereum mainnet and Coinbase’s layer-2 network, Base. Also, the exchange said it is the first attempt at integrating off-chain BTC liquidity with efficient and fast financial networks on Base and Ethereum.