Kraken Dives into Forex with FX Perps Launch

Kraken, a leading cryptocurrency exchange, has made a bold move into the realm of traditional finance by launching forex perpetual futures (FX perps) for the EUR/USD and GBP/USD pairs. This expansion signifies Kraken’s ambition to bridge the gap between crypto and conventional markets, offering traders new opportunities with up to 20x leverage.

• Kraken introduces EUR/USD and GBP/USD FX perps
• Up to 20x leverage available
• Pricing based on a widely recognized forex index
• 24/7 availability on Kraken Pro with limitations
• Part of Kraken’s strategy to merge crypto and traditional markets

FX perps, or forex perpetual futures, are contracts that allow trading major currency pairs like EUR/USD and GBP/USD without an expiration date. This means traders can hold positions indefinitely, a feature that can be both a boon and a bane depending on market conditions. Kraken’s offering of up to 20x leverage means traders can trade with borrowed money, up to 20 times their initial investment, amplifying potential profits or losses. The pricing of these FX perps is tethered to a widely recognized index that tracks real-world forex market prices, ensuring that traders are engaging with actual market movements.

These FX perps are available 24/7 on Kraken Pro, showcasing Kraken’s commitment to a non-stop trading environment. However, there are certain limitations in place. When traditional markets are closed, real-time price updates pause, and funding payments are deferred unless sufficient price observations are recorded. To mitigate risks, Kraken has implemented price collars, which act as safety measures to prevent trades from occurring too far from the last known price.

Kraken’s venture into FX perps is not its first foray into traditional finance. The exchange recently made waves by introducing commission-free stock and ETF trading, further blurring the lines between crypto and traditional markets. According to Alexia Theodorou, Kraken’s Head of Derivatives, this move enhances client exposure to major currency markets, leveraging Kraken’s position as a market leader in FX spot trading.

“Kraken’s move into FX perps is a strategic step to enhance our clients’ exposure to major currency markets, capitalizing on our established position in FX spot trading,” said Alexia Theodorou, Kraken’s Head of Derivatives.

Owen Lau, an analyst at Oppenheimer, sees this as a crucial step toward Kraken becoming a full-service app, bridging traditional finance with crypto services. He notes the potential for Kraken to drive the tokenization of traditional asset classes, a trend that could reshape the financial landscape.

“Kraken’s expansion into traditional finance is a step toward becoming a full-service app, bridging the gap between traditional finance and crypto services. This could drive the tokenization of traditional asset classes,” said Owen Lau, analyst at Oppenheimer.

Arjun Sethi, Kraken’s Co-CEO, echoes this sentiment, stating that expanding into equities is a natural progression, aiming to create a borderless, always-on trading platform built on crypto rails.

“Expanding into equities is a natural progression for Kraken. We aim to create a borderless, always-on trading platform built on crypto rails,” said Arjun Sethi, Kraken’s Co-CEO.

While Kraken’s move into FX perps is exciting, it’s not without potential challenges. The high leverage offered could be a double-edged sword, potentially leading to increased market volatility. Additionally, as Kraken plans to offer services in more regions, it will likely face increased regulatory scrutiny, which could impact its operations and strategic direction.

Looking ahead, Kraken isn’t stopping at EUR/USD and GBP/USD. They’re planning to add more forex pairs and expand access to more countries, continuing their mission to offer a comprehensive trading experience for users interested in both crypto and traditional assets. This aligns with the concept of effective accelerationism (e/acc), as Kraken pushes the boundaries of financial innovation and integration.

Kraken’s move into FX perps, while seemingly a departure from the crypto world, could facilitate greater integration between traditional and digital assets. This could potentially benefit Bitcoin as a store of value, as the broader acceptance of crypto rails in traditional finance could drive more mainstream adoption of cryptocurrencies.

Key Takeaways and Questions

• What new product has Kraken introduced?

  Kraken has introduced forex perpetual futures (FX perps) for EUR/USD and GBP/USD pairs.

• What are the key features of Kraken’s FX perps?

  Key features include no expiry date, up to 20x leverage, pricing based on a widely recognized forex index, availability 24/7 on Kraken Pro, and protective measures like price collars and conditional funding payments.

• How does Kraken ensure the pricing of FX perps reflects real-world markets?

  The pricing is based on a widely recognized forex index, designed to reflect real-world forex market movements.

• What safeguards are in place for Kraken’s FX perps during market closures?

  During market closures, there are no funding payments unless sufficient price observations are made, and price collars are implemented to prevent trades from occurring too far from the last known price.

• What other recent move has Kraken made into traditional markets?

  Kraken recently introduced commission-free stock and ETF trading.

• What are Kraken’s future plans for FX perps?

  Kraken plans to add more forex pairs and expand access to more countries.