Expanded Collateral Options for European Derivatives Trading
Kraken now allows European traders to post cryptocurrencies as collateral on its MiFID-regulated derivatives platform. This expansion builds upon the initiative that began earlier this year, which allowed for fiat-based collateral.
This development follows Kraken's receipt of a MiCA license from the Central Bank of Ireland and Multilateral Trading Facility (MTF) approval from the UK’s Financial Conduct Authority. These accreditations ensure a consistent and supervised regulatory framework for clients operating within the European Union.
The exchange initially launched derivatives in the EU in May, but regulators had at that time restricted the use of crypto collateral. Alexia Theodorou, Kraken’s Director of Derivatives, stated that the company worked closely with CySEC and ESMA to educate regulators on the structure of perpetual contracts and ensure their proper classification. This collaborative effort has now paved the way for crypto assets to be incorporated within regulatory guardrails.
The new framework empowers European traders to deposit cryptocurrencies as collateral. Kraken implements varying levels of haircuts, determined by the volatility of each specific asset. The platform automatically converts the collateral’s value into U.S. dollars for margin and liquidation calculations, thereby reducing operational risk and enhancing platform stability.
Kraken Aims to Unify Global and European Liquidity
This strategic change is a direct response to strong demand from institutional clients, particularly crypto-native firms, who are actively seeking greater flexibility to utilize digital assets in their derivatives trading strategies. According to Theodorou, offering crypto collateral under a regulated European regime is expected to attract new liquidity flows and balances to Kraken’s order book. This, in turn, will reinforce its position as a leading provider of perpetual contracts within the region.
By integrating MiFID, MiCA, and MTF licenses, Kraken is positioned to maintain unified global and European liquidity. This approach avoids market fragmentation and improves efficiency across its trading venues. The company believes this strategy will significantly support the institutional adoption of regulated crypto derivatives in Europe and set a precedent for other exchanges aiming to integrate digital assets securely and transparently.
Kraken has successfully strengthened its regulated crypto derivatives strategy in Europe, ensuring full compliance while providing professional investors with access to advanced trading instruments.
The information presented in this article is for informational purposes only and should not be interpreted as investment advice. The cryptocurrency market is highly volatile and may involve significant risks. We recommend conducting your own analysis.