Kraken Debuts Crypto Derivatives Trading in the UK for FCA-Qualified Clients

Kraken has officially launched crypto derivatives trading in the United Kingdom, targeting professional clients under the Financial Conduct Authority (FCA) regulations. This move aligns with the growing demand for regulated crypto derivatives, constituting around 70% of global crypto trading volume.

By offering these services through its FCA-regulated Multilateral Trading Facility (MTF), Kraken aims to provide institutional investors with a compliant and sophisticated trading environment.

Our Take on Kraken’s UK Crypto Derivatives Launch

Kraken’s expansion into the UK derivatives market shows its commitment to serving institutional clients seeking regulated crypto trading options. Integrating advanced features like multi-collateral contracts enhances the platform’s appeal to professional traders.

Pros

• ✅ Regulated under FCA via MTF
• ✅ Multi-collateral contracts for advanced trading
• ✅ Expansion aligned with institutional demand

Cons

• ❌ Available only to “Professional Clients”
• ❌ Still facing licensing limits in some regions

Crypto Derivatives Explained

Crypto derivatives are financial instruments whose value is derived from underlying cryptocurrencies like Bitcoin or Ethereum. They enable traders to speculate on price movements, hedge existing positions, and employ market-neutral strategies.

Leverage in derivatives trading allows for amplified exposure but also increases risk. For example, with 50x leverage, investors can control $5,000,000 worth of coins with $100,000 of their own money.

Notably, derivatives trading accounts for a significant portion of the global crypto market, showing the trading ecosystem’s importance.

Breaking Down Kraken’s New UK Derivatives Offering

Kraken’s UK derivatives offering is facilitated through its subsidiary, Crypto Facilities, which operates the FCA-regulated MTF. Acquired by Kraken in 2019, Crypto Facilities became the first crypto firm to obtain an MTF license from the FCA in 2020. The trading services are executed via Kraken’s Bermuda-based futures broker, ensuring compliance with international regulatory standards.

A standout feature of this launch is the introduction of multi-collateral perpetual contracts. Unlike traditional contracts that require a single form of collateral, Kraken’s approach allows traders to use various crypto assets as collateral, enhancing capital efficiency and providing greater flexibility for institutional clients.

Kraken’s Push Toward Institutional Growth and Global Reach

Kraken’s institutional ambitions are backed by a series of strategic moves. The acquisition of a MiFID II-regulated entity in Cyprus strengthens its foothold in the European Union, giving Kraken a clear path to serve professional clients across multiple jurisdictions.

In the United States, Kraken acquired NinjaTrader, a futures broker, to further integrate traditional and crypto futures markets under one roof.

Globally, Kraken is steadily working through region-specific licensing processes to extend its derivatives offering, carefully navigating the complex regulatory environment that varies widely from one country to another.

Why Professional Traders Are Choosing Kraken for Derivatives

Kraken sets itself apart in the competitive crypto derivatives market by focusing on regulated access, institutional-grade infrastructure, and tailored product offerings.

Operating under the FCA’s oversight through its Multilateral Trading Facility (MTF), Kraken provides a fully compliant environment that distinguishes it from rivals lacking similar regulatory clarity.

The platform is engineered to support high-volume trading with minimal downtime, appealing to professional traders who require reliability and performance. Kraken’s product innovation is also notable, particularly its multi-collateral trading system, which allows users to post various crypto assets as margin, offering greater flexibility and capital efficiency.

Additionally, strategic acquisitions like NinjaTrader have strengthened Kraken’s position by enhancing its reach and bridging the gap between traditional finance and the digital asset space.

Understanding FCA Rules for Crypto Derivatives in the UK

The FCA classifies clients into two categories: Retail and Professional. Retail clients are afforded greater consumer protections but are restricted from accessing certain high-risk products, including crypto derivatives.

Professional clients, who meet specific criteria related to trading experience and financial resources, can access a broader range of financial instruments, including derivatives.

What UK Professionals Can Expect from Kraken Derivatives

Professional clients in the UK now have access to Kraken’s regulated derivatives trading platform, enabling them to engage in advanced trading strategies with the assurance of compliance with FCA regulations.

While retail clients remain excluded from derivatives trading due to regulatory restrictions, future changes in the regulatory environment could open access to a broader audience.

Step-by-Step Guide to Kraken’s UK Derivatives Platform

Eligible UK clients can access Kraken’s derivatives trading platform by following these steps:

1. Confirm Eligibility: Ensure you meet the FCA’s criteria for professional client classification.
2. Complete Onboarding: Submit the necessary documentation and complete the knowledge assessment as part of Kraken’s onboarding process.
3. Access the MTF: Once approved, access Kraken’s Multilateral Trading Facility for derivatives trading.
4. Start Trading: Begin trading crypto futures and derivatives using the available multi-collateral options.

Looking Ahead

Kraken’s expansion into the UK derivatives market is part of a broader strategy to bridge traditional and digital finance. The company’s recent ventures, including the addition of U.S. equities trading and the achievement of $1.5 billion in revenue in 2024, indicate a trajectory toward becoming a comprehensive financial services provider. Speculation about a potential initial public offering further underscores Kraken’s ambition to solidify its position in the global financial landscape.

Visit Kraken FAQs What is Kraken’s FCA-regulated Multilateral Trading Facility (MTF)?

Kraken’s MTF is a regulated trading platform operated by its subsidiary, Crypto Facilities, authorized by the FCA to facilitate crypto derivatives trading for professional clients.

Who qualifies as a professional client for Kraken derivatives in the UK?

Individuals or entities that meet the FCA’s criteria regarding trading experience, financial resources, and expertise with leveraged instruments.

What are multi-collateral perpetual contracts?

These are derivative contracts that allow traders to use various crypto assets as collateral, enhancing capital efficiency and providing greater flexibility in trading strategies.

Will Kraken derivatives be available to retail clients in the future?

Currently, derivatives trading is restricted to professional clients. Any future availability to retail clients would depend on changes in FCA regulations.

How does Kraken compare to Binance or BitMEX in derivatives trading?

Kraken differentiates itself through its commitment to regulatory compliance, offering a regulated trading environment under the FCA, and providing innovative products tailored to institutional clients.

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