On January 16, David Ripley, the CEO of Kraken, spoke with Sonali Basak and Katie Greifeld on “Bloomberg Crypto” about the impact of the recently approved spot Bitcoin ETFs on Kraken and the broader cryptocurrency industry.
Bitcoin ETFs as a Positive Development
Ripley emphasized that the introduction of these spot Bitcoin ETFs is a net positive for Kraken and the cryptocurrency industry.
He outlined several reasons for this positive outlook. Firstly, Kraken directly benefits from these ETFs as the company provides the index for six of the eleven spot Bitcoin ETFs that were approved. This relationship positions Kraken as a key player in the ETF ecosystem. Secondly, Ripley views these ETFs as another access point for individuals to enter the cryptocurrency space, aligning with Kraken’s mission to grow cryptocurrency adoption and achieve financial freedom.
Impact on Kraken’s Business Model
Ripley addressed the potential impact of these spot Bitcoin ETFs on Kraken’s business model. He acknowledged that while some new individuals to crypto might initially opt for an ETF instead of platforms like Kraken or Coinbase, this is not a concern. Kraken offers a wide array of features and services, including over 200 tokens and various functionalities that ETFs do not provide. Notably, Kraken allows users to hold Bitcoin and custody it themselves, which he argues is a significant advantage over ETFs.
Fees and Pricing Strategy
Regarding the fees and pricing structure, Ripley clarified that Kraken does not plan to adjust its fees in response to the introduction of spot Bitcoin ETFs. He explained that Kraken’s offerings are sufficiently distinct from ETFs, making them not direct substitutes. Therefore, the different price points for these products are justified by their differing nature.
Custody Services and Business Expansion
Ripley also discussed Kraken’s upcoming launch of its custody product, which he views as a significant development for the company. He believes that for many customers, there is a synergy between finding liquidity and custody services in one place. However, he also acknowledged that some businesses might choose alternate custody providers or even self-custody.
Ripley highlighted Kraken’s long-standing reputation for security as a key differentiator in the custody market. He referred to Kraken as a security company with an exchange built on top, emphasizing the company’s strong focus on security features and functionality.
Utilizing Banking License for Diversification
In terms of diversifying into financial services, Ripley mentioned Kraken’s special purpose depository institution license with the state of Wyoming. This novel license includes crypto-specific regulations that are beneficial for customers, particularly regarding events like forks. Ripley sees this as an additional advantage that Kraken can offer to potential custody customers.
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