A leading cryptocurrency exchange, Kraken, has recently unveiled a new, fully licensed brokerage service in Australia. This new service is marketed towards wholesale clients in Kraken’s Australian clientele. It is aimed at sophisticated institutional and retail investors at the forefront of crypto trading who require higher-level access within the crypto derivatives marketplace. By obtaining the relevant license for this service, Kraken complies with Australia’s regulatory system while meeting the sophisticated demands of this client group—compliant digital asset trading instruments.
Service Accessibility
Approved users from Australia who qualify for this new license were able to access these services starting November 3. This provides qualifying investors the opportunity to trade crypto-based derivatives directly on the Pro app Kraken. Derivatives are financial instruments offered to trade based on the price value of their underlying currency assets, like Bitcoin or digital currencies. Through these instruments, investors take speculative positions or hedge positions with respect to cryptocurrency asset values without the need to possess the actual currency. The integration through the Kraken Pro app transfers this new offering into the exchange’s existing professional trading platform, which has already built user adoption, thus enabling wholesale clients seamless access to derivatives.
Eligibility and Application
Limited access to Kraken’s newly licensed crypto derivatives offering in Australia is available only to wholesale clients. For other interested participants, access to the service entails assessing their qualification based on the criteria for wholesale clients under Australian legislation. It is indicated in the source document that interested users can assess their eligibility and complete the application steps using the Kraken Pro app. This indicates that the application platform has an automatic client parsing feature that assesses whether clients qualify for a particular service and allows clients who meet the requirements to fill in an application for servicing through derivatives trading.
Features and Tools
The derivatives service Kraken, which recently opened in Australia, adds new features for the operational flexibility and asset security of wholesale clients. Multi-collateral support was one primary feature discussed. This allows clients to utilize different forms of assets to set collateral for their derivatives positions, thus providing flexibility in their trading capital. Accepted collateral types include fiat currencies, stablecoins (currencies issued by private organizations that are moored to the value of fiat currency), and many cryptocurrencies. Along with flexible collateral options, the service also has many risk management and trading strategy tools. These are supposed to empower eligible users to control their exposure to volatility in the market and, in some cases, further fortify the security of their digital assets while trading derivatives on the platform.
Risk Warning
Kraken has added advanced trading options and features with a disclaimer for the risks that certain crypto derivative trades have. The exchange makes it clear that losses from these financial products can be devastating. In many cases, the leverage typically associated with derivatives may exponentially multiply a loss in relation to an investor’s initial outlay. This caution seeks to highlight the sharp risks associated with the underlying cryptocurrency markets and, for derivatives traders, the further risks of loss; therefore, clients should have sufficient understanding of these substantial financial risks before engaging in the service.
Regulatory Compliance
As Australian general manager of Kraken, Jonathan Miller explained why regulatory compliance is critical to the firm’s operations considering the launch of this new service. Miller remarked that the implementation of a licensed broker service in Australia proves that Kraken is committed to local regulations. His comments also suggested that this action targets Australian wholesale clients who want compliant and legally permissible ways to engage with the crypto derivatives market. Complying with local rules in Australia, like Kraken’s obtaining the requisite license, places the firm in line with an emerging phenomenon of the industry where cryptocurrency exchanges seek to operate within defined legal and financial structures in different jurisdictions globally, aimed at providing credible and regulated access to digital assets for specific client groups.
