Crypto exchange Kraken launched a crypto custody service in the US targeted at institutional clients on Wednesday.

Kraken Financial, a state-chartered bank based in Wyoming, will provide the service. The service includes digital asset custody and institutional deposit accounts.

The announcement comes amid renewed excitement in the crypto market, spurred by the approval of Spot Bitcoin ETFs. This change is marked by growing interest from institutional investors, renewed optimism, and wider adoption of cryptocurrencies.

“Custody has always been integral to the institutional crypto space and the recent success of the bitcoin ETFs has only underscored the need for a broader range of qualified custodians,” said Tim Ogilvie, Head of Kraken Institutional. 

He pointed out that Kraken Custody’s launch is “well-timed,” offering another option for custody.

Kraken Custody is the first product under our new institutional brand. Offered via Kraken Financial, our state-chartered bank that holds fiat deposits in full reserve, it is ideally suited to offer qualified custody solutions for US institutional clients.https://t.co/1TzDm00CBZ

— Kraken Exchange (@krakenfx) March 20, 2024

Kraken Crypto Custody Independent From Main Exchange

Kraken Financial operates independently, keeping its funds and assets separate from the main Kraken exchange. 

This setup is in Wyoming, known for being forward-thinking in the crypto space. The state took early steps to regulate the crypto industry, notably by launching a fintech sandbox in 2020 to experiment with new financial products and services. 

“The state of Wyoming’s clear regulatory structure means Kraken Financial can offer qualified custody that fully meets institutions’ requirements,” said Kraken Financial CEO Trevor Rutar.

Major Banks Move Into Crypto Custody

The worldwide market for crypto custody services is becoming increasingly competitive with the entry of significant financial institutions. 

For instance, HSBC stepped into this space last year, offering a custody service for digital assets, targeting institutional clients interested in tokenized securities.

In the US, Custodia Bank also made a move by introducing its Bitcoin custody platform in certain states. Meanwhile in Europe, Swiss crypto firm Taurus teamed up with Deutsche Bank to combine crypto custody with tokenized services.

Furthermore, Standard Chartered-backed Zodia Custody began offering its digital asset custody services in Singapore, focusing on financial institutions.