Kraken crypto exchange expands into London futures market

  • By Tom Cleveland

  • February 8, 2019
  • 3:14 am BST

It is now official. A deal that was consummated in December between Kraken, a U.S. based crypto exchange, and London-based Crypto Facilities, has gained regulatory approval to proceed. By this purchase, Kraken is moving forward into the futures market in a big way and making a major step to position itself for the eventual entry of large institutional players into the cryptocurrency market.

Although no purchase price was disclosed, a spokesperson for Kraken said the amount paid was definitely “nine figures”. Crypto Facilities lists futures for the most popular crypto tokens on the market, including bitcoin, ethereum, ripple, XRP, litecoin and bitcoin cash.

According to one report: “Crypto Facilities, founded by Timo Schlaefer and based in the City of London, launched reference rates tied to cryptocurrencies. It is also the administrator of the CME’s Bitcoin Reference Rate, which seeks to establish a “true price” of bitcoin to aid the development of a cash-settled derivatives market.”

Schlaefer, the CEO and founder of Crypto Facilities, spoke to the synergism of the combination: “It has been our mission to build the most sophisticated, powerful and user-friendly cryptocurrency trading platform. Teaming up with Kraken allows us to innovate the next generation of products and tremendously boosts the value we are able to provide our clients.”

Jesse Powell, the ebullient chief executive of the Kraken exchange, was excited about the future potential of the union: “I’m thrilled to welcome the Crypto Facilities team into the Kraken family. Over the coming months, our teams will continue to enhance and expand these offerings. We’ve got great stuff in store for traders and institutional clients in 2019.”

Crypto Facilities, soon to be Kraken Facilities per its regulatory filing, is also a regulated crypto trading platform and index provider. Trading crypto derivatives, aided with “50X” leverage, is its speciality. Its regulatory oversight regimen from the UK’s FCA will also bring credibility to Kraken’s overall effort.

This acquisition is not Kraken’s first, but it is the largest. It complements a group of other acquisitions that include exchanges, a wallet funding service, and a portfolio-tracking platform. After last year’s meltdown in valuations, analysts have predicted that a wave of consolidations is necessary for the health and future prosperity of the industry. In order to attract large institutional players, broader and better infrastructure is a prerequisite.

This consolidation trend may already be in motion. Per one analyst: “Kraken’s recent acquisition could indicate a larger trend among exchanges. As the crypto trading sector matures, competition between cryptocurrency exchanges will likely intensify. In an effort to fight for market share, it seems logical that exchanges will purchase complementary services to augment their offerings.”