Kraken Rolls Out Crypto Derivatives Trading for UK-Based Institutional Traders

Crypto exchange Kraken has recently launched crypto derivatives trading in the UK, targeting investors classified as “Professional Clients” by the Financial Conduct Authority (FCA). The move is a major step for Kraken derivatives trading UK, especially given that derivatives trading accounts for roughly 70-75% of global crypto trading volume.

By introducing a fully regulated solution under the FCA’s framework, Kraken aims to cater to institutional clients looking for sophisticated trading products, without compromising compliance or innovation.

Understanding Crypto Derivatives

Before diving deeper, it’s crucial to clarify what crypto derivatives are. Simply put, they’re financial instruments that derive value from underlying cryptos, such as Bitcoin or Ethereum. Common examples include futures, options, and perpetual swap contracts. Traders often use derivatives to:

• Leverage Up: Potentially magnify gains (but also risks)
• Hedge: Manage price volatility by locking in certain prices
• Execute Market-Neutral Strategies: Profit from volatility regardless of market direction

Derivatives have exploded in popularity because they can cater to both speculative and risk-averse strategies. In fact, derivatives trading regularly outpaces spot trading in the crypto world, reflecting its importance to institutions and sophisticated traders.

Highlighting Kraken’s New UK Derivatives Platform

Kraken trading platform’s UK derivatives service is powered by Crypto Facilities, an FCA-licensed MTF. This ensures that all trades meet the required regulatory requirements—something especially appealing to banks looking for legally compliant exposure to crypto.

It’s worth noting that actual trade execution is handled by Kraken’s Bermuda-regulated futures brokerage.

Unlike standard futures that generally accept only one form of collateral, Kraken allows assets like BTC, ETH, USDT, USD, and other assets to be used to increase capital efficiency.

Because of these advanced features, Kraken is specifically tailored for Banks, hedge funds, and other professional entities.

Kraken’s Institutional Strategy and Global Expansion Plans

Kraken hasn’t limited its ambitions to the UK market. Over the past few years, the exchange has made key moves that show its commitment to becoming one of the best crypto exchanges for institutional clients worldwide:

• Cyprus MiFID II Acquisition: By obtaining a MiFID II-regulated entity in Cyprus, Kraken is positioning itself for an EU-wide expansion as the Markets in Crypto-Assets (MiCA) framework fully takes effect.
• NinjaTrader Purchase in the U.S.: This acquisition hints at bridging traditional and crypto futures for American traders, although U.S. regulations remain a challenge.
• Region-Specific Licensing: Because derivatives face more stringent oversight than spot trading, Kraken is methodically securing licenses in each major market, from Europe to Asia.

Why Kraken Stands Out in the Derivatives Landscape

Plenty of crypto exchanges offer derivatives, but Kraken’s approach sets it apart in a few key ways:

• FCA and Global Compliance: Kraken has been prioritizing meeting local regulations, reducing legal uncertainties for users.
• Strong Institutional Infrastructure: High-volume order matching, advanced APIs, and minimal downtime make it a favored platform for large players.
• Innovative Product Lineup: Multi-collateral perpetuals ensure a capital-efficient approach—an area that currently only a few competitors are matching.
• Strategic Acquisitions: Moves like buying NinjaTrader show a clear intent to bridge the gap between traditional finance and crypto.

Navigating the UK’s FCA Crypto Regulations

In the UK, the FCA divides users into two groups: Retail Clients and Professional Clients. Retail Clients receive heavier protections and are restricted from accessing high-risk products like crypto derivatives. However, professional Clients need to meet stricter criteria, usually involving larger trading volumes or financial resources. They gain access to a wider product set but have fewer safety nets if things go wrong.

See the FCA’s Professional Client Criteria Guidelines for more specifics on the qualification process.

Implications for UK Institutional Crypto Traders

Institutional players or Kraken professional clients can now access derivatives trading in the UK. By tapping into Kraken’s regulated MTF, they can engage in Kraken futures trading or other derivatives.

While everyday retail traders remain excluded for now, future policy changes could make derivatives more widely available—much like what we’ve seen in other financial markets over the years.

How to Start Trading Derivatives on Kraken (UK Users)

• Check Eligibility: First, confirm you fit the FCA’s definition of a “Professional Client.” This involves proving sufficient trading experience and financial resources.
• Register and Verify: Sign up on Kraken, request Professional status, and provide the required documents (financial statements, trading history, etc.).
• MTF Access: Once approved, you’ll gain access to the FCA-regulated MTF run by Crypto Facilities.
• Go Live: You’re now set to access Kraken derivatives trading UK (including multi-collateral perpetual contracts) under a highly regulated environment.

Kraken’s Future Ambitions

Kraken’s ultimate vision is to combine both digital and traditional assets into one platform. The exchange earned $1.5 billion in revenue in 2024 and is rumored to be considering an IPO.

The platform has already introduced stock and ETF trading in select U.S. regions, showing a broader plan to become a full-service financial hub that welcomes both crypto natives and traditional investors.

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