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Kraken’s MiFID License Opens Doors to Crypto Derivatives
February 4, 2025
In a move aimed at expanding its presence in the European Union (EU), California-based cryptocurrency exchange service provider Kraken has secured a Markets in Financial Instruments Directive (MiFID) license. This significant development grants the company the authority to offer crypto-derivative products, specifically futures and options, to professional EU consumers.
The acquisition of a Cypriot investment firm was crucial in securing this MiFID license from the Cyprus Securities and Exchange Commission (CySEC). The transaction has been approved by the regulatory body. With its new capabilities, Kraken will be able to offer financial instruments tailored for informed investors seeking more sophisticated trading options.
Kraken’s European expansion began two years ago with licenses obtained in Spain and Ireland. Subsequently, the company launched its custody services in the UK and acquired a Dutch cryptocurrency brokerage firm in September 2024. This strategic progression mirrors the growing interest in cryptocurrencies across the EU, which is expected to surge at a rate of around 15% annually, ultimately reaching $6.9 billion by 2033.
EU Crypto Regulation Trends
Recent trends indicate increased regulatory oversight in some European Union countries. Concerns surrounding anti-money laundering (AML), token issuance, and stablecoin regulation are addressed through the Markets in Financial Instruments Directive Alternative (MiCA). The Asia-Pacific region has taken a more stringent approach to cryptocurrency market regulation, as seen with exchanges like Crypto.Com and OKX receiving MiCA licenses.
By entering the crypto derivatives market, Kraken is affirming its commitment to the European region, which it perceives as an area with advanced and sophisticated trading capabilities. However, this move also means that the exchange will face stiff competition from well-established players in the space such as Bitstamp and Coinbase.
Derivatives Offerings
The newly acquired license enables Kraken to offer futures and options to professional investors based on cryptocurrency assets. These products are particularly appealing to professional brokers due to their high volatility, although this characteristic also increases the risk associated with trading them. Interestingly, this is not the first time Kraken has ventured into derivatives; it previously offered a staking service from 2017 to 2018 before ceasing operations following legal complications with the Securities and Exchange Commission (SEC).
As a result of its expanded capabilities, Kraken can now cater to more demanding trading needs, positioning itself for increased market share in the competitive cryptocurrency exchange landscape.
Source: cryptotale.org
