Kraken, one of the largest crypto exchanges, has launched kBTC, a wrapped bitcoin (BTC) token. The token will initially be available on Ethereum and OP Mainnet, with 1:1 backing by bitcoin held in Kraken’s custody.
kBTC: Bringing Bitcoin to DeFi
Wrapped tokens like kBTC allow cryptocurrencies such as bitcoin and ether (ETH) to be used in decentralized finance (DeFi) ecosystems that typically run on other blockchains. With kBTC, Kraken aims to accelerate DeFi adoption, enabling BTC holders to trade, lend, and borrow on DeFi platforms without the need to sell their holdings.
Mark Greenberg, Kraken’s global head of asset growth and management, commented:
“We believe in an onchain future, and DeFi represents a key part of that opportunity. kBTC relies on Kraken’s long history of seamless UX and top-tier security, bringing DeFi to new users and driving decentralized application adoption.”
Custody and Transparency
Kraken emphasized that the bitcoin backing kBTC will be held by Kraken Financial, the exchange’s U.S.-regulated qualified custody solution, in a segregated wallet. The wallet address will be made public, allowing users to verify that all BTC is fully backed and in reserve.
The minimum deposit size for kBTC on Ethereum and Optimism will be 0.00026 BTC (approximately $15, assuming BTC trades at $60,000).
A Growing Market for Wrapped Bitcoin
Kraken is not alone in venturing into the wrapped bitcoin space. The launch follows similar moves by Coinbase, which introduced its cbBTC token on Ethereum and Base networks last month. The move comes amid industry concerns over BitGo’s partnership with Tron founder Justin Sun, which has led some players to develop alternatives to WBTC, the largest wrapped BTC token with a $10 billion market cap.
At launch, kBTC will integrate with multiple blue-chip DeFi platforms, including:
- Ethereum and Optimism
- Paraswap, Curve, Yearn, Beefy, and Velodrome
- Kraken Wallet, Gauntlet, CowSwap, Morpho, deBridge, and more
While no spot markets will be available for kBTC initially, Kraken noted that users can redeem the token for the underlying bitcoin and trade it as they normally would.
