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Kraken, a pioneer in the crypto space since 2011, is one of the first regulated platforms in Europe to allow crypto-collateralized perpetual futures trading. This means Kraken Pro clients in the EU can use their BTC, ETH, or stablecoins as collateral when trading on margin.
This is a massive step closer to MiFID II-compliant futures trading and a big win for traders in the EU who can now take advantage of increased flexibility and capital efficiency.
Open a Kraken Pro account and start trading with up to 10x leverage on multiple futures pairs while using your crypto as collateral.
Kraken Sets the Standard for Regulated Crypto Derivatives in Europe
Kraken once again takes the lead in the crypto space by offering regulated crypto derivatives under MiFID II and MiCA frameworks in the European Union. This is proof that Kraken is committed to bringing safe and regulated features to its clients as it expands globally.
While the regulatory frameworks in the EU are unified, the regulatory approach in the US and Asia is still fragmented and evolving. As a result, both the US and Asia are watching EU regulations closely and may develop their own legislation to align with that of Europe. Kraken already stands at the forefront of regulated exchanges, and after its EU rollout, trading futures with crypto collateral could follow in new regions.
Crypto Collateral Unlocks the Full Potential in the Futures Market
When trading crypto on margin, it should be a no-brainer to use crypto as collateral. However, in certain jurisdictions, this is impossible due to local regulations. Thanks to Kraken, trading futures using crypto collateral is now compliant under EU regulations. Here’s what it means for traders:
- Traders can now use BTC, ETH, or stablecoins as collateral instead of fiat.
- Previously, only fiat currency was available as collateral, but that comes with issues such as conversion fees, transaction fees, and delays related to funds clearing to your account.
- Crypto collateral avoids this friction, and it’s available to use on USD-margined positions.
Why Use Crypto as Collateral: Real Life Scenarios
Let’s take a closer look at the benefits of using crypto as collateral with a couple of real-life examples.
You hold some Ethereum (ETH), but it seems to be losing value due to unforeseen market conditions. You don’t want to sell your ETH because you believe its price will increase in the coming years, so you open a short ETH/USD futures position using your ETH as collateral. Then, after a drop, the price of ETH starts stabilizing. You close your short position at a profit, while still keeping your ETH that was used as collateral.
In a different scenario, you might want to go long on BTC/USD, but don’t have immediate access to fiat. In this case, you can use USDC stablecoins and you open a futures position where the USDC acts as your collateral. When you decide to close your position, your collateral is unlocked and ready to be used again or withdrawn.
In both cases, you can avoid operating with fiat while putting your crypto assets to good use.
Key Benefits for Individuals and Institutions
Both individual traders and institutions can benefit from Kraken’s expanded collateral options. Traders can use their crypto holdings as margin and avoid conversion delays and fees whenever they need to open trades fast. Additionally, they can diversify their collateral types depending on market conditions.
On the other hand, institutions can hedge their holdings during bear markets without selling their coins. Using cross-asset leverage, they can optimize their capital more efficiently while maintaining underlying crypto exposure.
MiFID-Compliant and Market-Ready
Kraken is fully compliant with the MiFID II regulatory framework and aims to follow local regulations in every country and jurisdiction where it operates. After its EU rollout, Kraken could be looking to expand these features to more regions.
With this new update, Kraken Pro users can trade with up to 10x leverage and use their crypto or stablecoins as collateral for trading futures, or keep using EUR as before. Both crypto and fiat collateral options are available through the Kraken Pro web platform or the Kraken Pro mobile app.
Getting Started in Four Steps
Kraken Pro clients in the EU can start trading using their crypto as collateral. Here’s how to begin:
- Visit Kraken’s website and open an account.
- Complete verification and accept the terms and conditions under Kraken EU.
- Deposit funds to your Kraken Pro spot wallet, either BTC, ETH, or stablecoins that you plan to use as collateral.
- Open a futures trade or manage an open position by selecting your desired collateral.
- Use up to 10x leverage.
That’s all it takes to start trading futures on leverage via your Kraken Pro account, while benefiting from regulatory compliance and institutional-grade security.
Empowering Traders to Make Crypto Capital Work Harder
Ever since Kraken was created, it has strived to give traders more control over their assets and enable them to use their capital more efficiently.
Now, with full compliance under the MiFID II framework, Kraken Pro EU clients can safely start using crypto as collateral in a transparent and regulated environment. Join Kraken Pro now and unlock the full potential of your crypto by using it as collateral.
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