Key Insights:
- Kraken has secured a MiFID II license by acquiring a Cypriot investment firm, allowing it to offer crypto derivatives in the EU.
- The Cyprus Securities and Exchange Commission has approved Kraken’s operation under the MiFID II framework.
- Kraken can now legally provide perpetual and fixed maturity futures contracts across the European Economic Area.
Kraken has advanced its global expansion by securing regulatory approval to offer crypto derivatives across the European Union. The crypto exchange obtained a MiFID II license by acquiring a Cypriot investment firm. This move allows Kraken to legally serve retail and institutional users throughout the European Economic Area.
Kraken Gains Ground in the European Market
‘Per Cypriot money services license obtained in July, the Cyprus Securities and Exchange Commission has approved Kraken’s application to operate within the MiFID II framework. Kraken stated,
“This approval enables the platform to offer perpetual and fixed maturity futures contracts across EU member states.”
Germany, France, and the Netherlands can now work with Kraken’s derivatives infrastructure.
Cyprus is a beachhead to expand Kraken’s regulated services in Europe in accordance to its strategy of acquiring a license, it added. Demand for regulated digital asset services keeps moving at breakneck speed in Europe, and derivatives are particularly in high demand. While ensuring it abides by local laws and rules, Kraken plans to tap into this demand.
The exchange has stressed improving existing products instead of introducing new contract types. European users, on the other hand, benefit from Kraken’s infrastructure, which provides for efficient trade execution and smooth fund transfer. This structure provides liquidity access in the EU network and reduces operational costs.
Derivative Trading Now a Core Business for Kraken Exchange
Crypto derivatives have become central to Kraken’s product suite, with the exchange reporting massive global trading volumes. Markets are participating very strongly, but today, derivatives trading is near or under $1 billion, which we think will grow. The firm said the instruments at play account for most of its platform’s activity.
The world has heaved deep over to derivatives as crypto trade volumes constitute almost 75% of the markets. Kraken has stood ready to address this demand with well-known contracts featuring established market structures. This building continues, and it’s expanded geographic access and regulatory compliance.
Previously, Kraken’s derivatives portfolio benefited from earlier acquisitions of platforms such as Crypto Facilities and NinjaTrader. Through these deals, Kraken got a larger user base and some technical capabilities in the US and the UK. Neither of these services has integrated particularly well, setting Kraken on the right path to be the authority for regulated crypto trading.
Kraken Expands Its European Ecosystem with Embed and Licensing
In Europe, Kraken also launched its Embed application to enable neobanks and fintech platforms to offer customers access to the service. Through this integration, these partners can now offer their customers spot and derivatives trading via the platform. This Embed tool provides easy access to Kraken’s trading engine and liquidity network.
Kraken operates under MiFID II license with wider operational flexibility and greater attractiveness in jurisdictions like Cyprus, but not so much in places like Germany and Hong Kong. These locations enable rapid rollout of provider services due to their efficient paths to regulatory approval. These jurisdictions have proved crucial to Kraken’s ability to continue to grow.
Kraken’s move coincides with the growth curve of the EU as one of the fastest growing digital asset markets. While focusing on serving the regional regulatory requirements, the firm is still expanding its service infrastructure. This approach guarantees long-term European scalability and legal stability.
The pending onboarding of a Cypriot investment firm acquisition and MiFID II license is a major milestone for Kraken in its European growth plan. The approval provides Kraken with additional capability to offer derivatives in regulated environments in a way that relies on its robust infrastructure.
