Crypto Exchange Kraken Launches Wrapped Bitcoin Token kBTC

As a seasoned crypto investor with over a decade of experience in this wild and unpredictable world of digital assets, I can’t help but feel a sense of excitement at Kraken’s latest venture – their own wrapped bitcoin product, kBTC. Having closely followed the evolution of DeFi, I’ve seen the rise and fall of countless projects, and the entry of established players like Kraken is always a significant event.

In an exclusive conversation with CoinDesk, the cryptocurrency platform Kraken announced the release of their own version of a Bitcoin (BTC) token called kBTC.

The token can be found on both the Ethereum network and the Open Platform Mainnet. Each token is directly linked to one unit of Bitcoin, according to a representative from the company.

The bitcoin will be custodied in Kraken Financial, the exchange’s U.S. qualified custody solution, in a segregated wallet. The address of this wallet will be made public so that customers can see the bitcoin is in full reserve.

Wrapping tokens enables unsupported cryptocurrencies such as Bitcoin and Ether (ETH) to be traded, lent, and borrowed on decentralized finance (DeFi) systems. The most prominent token in this category is WBTC, which enables users to utilize Bitcoin across various blockchains. This token plays a significant part in DeFi lending by serving as collateral. It has a market capitalization of approximately $10 billion.

Other significant entities, like Kraken, haven’t been the only ones to debut a wrapped Bitcoin token recently. Following BitGo’s partnership with Tron founder Justin Sun, there’s been an influx of new tokens issued. This move sparked widespread concern. Not long ago, Coinbase (COIN) unveiled its own version, the Coinbase Wrapped BTC (cbBTC), which operates on both the Ethereum and Binance Smart Chain networks.

Initially, kBTC will be accessible in multiple leading Decentralized Finance (DeFi) applications. Its collaborators will encompass a variety of entities such as Kraken, Kraken Wallet, Ethereum, Optimism, ParaSwap, Yearn, Gauntlet, deBridge, Definitive, CowSwap, Beefy, Velodrome, Curve, and Morpho.

As an analyst, I wish to clarify that at the initial phase, Kraken will not offer direct trading for kBTC markets. However, if clients possess Bitcoin, they have the option to exchange it for the underlying asset and proceed with trading as usual.

On both Ethereum and Optimism, the least amount you’ll need to deposit in kBTC is about 0.00026 BTC, equivalent to approximately $15, given a Bitcoin price of $60,000.

Launching the token aligns with Kraken’s goal of speeding up Decentralized Finance (DeFi) acceptance, and it is anticipated that the kBTC will become a common tool throughout the ecosystem.

Mark Greenberg, head of asset growth and management at Kraken, expressed that they are convinced about a future where transactions occur on a blockchain, and Decentralized Finance (DeFi) plays a significant role in achieving this vision. He stated that their product kBTC leverages Kraken’s extensive history of providing smooth user experience and robust security to introduce DeFi to novice users and speed up the utilization of decentralized applications.