Kraken Unveils kBTC: A New Player in the Wrapped Bitcoin Arena

In a strategic move to expand Bitcoin’s utility in decentralized finance (DeFi), cryptocurrency exchange Kraken has launched its own wrapped Bitcoin token, kBTC, on October 17, 2024. The new offering joins an increasingly competitive market alongside recent initiatives from rivals like Coinbase.

kBTC, an ERC-20 token, operates on both Ethereum and OP Mainnet networks, with each token backed 1:1 by Bitcoin held in custody at Kraken Financial, a Wyoming-chartered Special Purpose Depository Institution. The exchange has made transparency a key feature, providing public access to its reserve wallet, which currently holds 100 BTC (approximately $6.7 million) split between 80 kBTC on Ethereum and 20 kBTC on OP Mainnet.

“We believe in an onchain future and DeFi represents a key part of that opportunity,” said Mark Greenberg, Kraken’s Global Head of Asset Growth and Management. The platform emphasizes that kBTC leverages its 13-year track record in custody infrastructure to provide a secure bridge between Bitcoin and DeFi applications.

The launch features partnerships with several prominent DeFi protocols, including Paraswap, Yearn, Gauntlet, deBridge, and Definitive. While no spot markets are available at launch, users can deposit a minimum of 0.00026 BTC (roughly $15) and redeem their kBTC for the underlying Bitcoin as needed.

This development comes amid growing competition in the wrapped Bitcoin sector, following Coinbase’s introduction of cbBTC last month and concerns surrounding BitGo’s WBTC partnership with BiT Global, a firm connected to Tron founder Justin Sun. WBTC currently leads the market with a $10 billion capitalization.

Kraken has reinforced the security aspects of kBTC through an audit by Trail of Bits, a respected security firm, and plans to extend compatibility to additional networks, including non-EVM ecosystems, positioning itself for broader adoption in the evolving DeFi landscape.