Opinion & Analysis

Kraken’s acquisition of crypto facilities leads the company to a new high

Kraken is a giant cryptocurrency exchange based out of US and is operating in Canada, the EU, Japan, and the US, and it is the largest Bitcoin exchange in Euro volume and liquidity. Recently, the company made a huge announcement about the acquisition of cryptocurrency facilities. This will restructure the entire company to rank between 1 and 10 in the global bitcoin exchange. Currently, they are the 46thexchange by adjusted volume.

Kraken released details about the acquisition to the press, but they had not mentioned the exact amount spent on crypto facilities. They hinted the cost to be a “nine-digit figure” which amounts to $100 million at the least. This move of acquisition took the market by surprise as there was news about the company downsizing last year. CEO of Kraken, Jesse Powell, cleared the air confirming the dismissal of 57 employees in Halifax. However, he stated that the company was still hiring in various sectors.

Furthermore, Kraken has stepped into Bitcoin Derivatives space. This could be given the success of its #10 competitor Huobi Global, a cryptocurrency exchange based out of Singapore, which proliferated after launching the derivatives market in November last year. Instead of creating its platform, Kraken has used Google’s approach and procured the best derivative platform and have put them to use for their clients.

Crypto facilities are based in London, and as seen by the UK’S financial conduct authority, the firm will be functional from its base country and benefit from the oversight of the authority. Even though the company operates from London, the future of the product will be Kraken branded.

Crypto facilities have taken a step forward and introduced a Revenue Sharing Program (RSP) for the clients who provide liquidity. This program calculates the contribution from clients on a weekly basis, starting at 12 p.m. UTC ( Universal Time Coordinated) every Friday. RDP is scheduled to run for ten weeks initially, and at the end of each week, the revenue will be calculated according to the contribution and paid out. $50,000 a week is allotted to the clients who create markets in the exchange.

Unlike stock market and share prices, the price of crypto asset originates from spot trading. Hence, the derivative market is effective only in a limited period. Even so, the sentiment value on a derivative market has the power to affect the price of an asset, which means, if the derivative values an asset more or less than your value, you will have to change your value and the price to trade it.

Virtually, the value of derivative exchanges is unlimited. For-profit, the Bitcoin derivatives, and its competitors are offered higher prices, depending on the volume, the offered price could be extreme. Binance’s founder, ChangpengZhao mentioned that the crypto market grows rapidly (could increase by 1000 folds)and hence makes the derivatives market bigger. BitMEX proved Changpeng right by trading for $1 billion on an everyday basis, making it the largest exchange in the derivatives market. Kraken is now following the steps of both BitMEX and Huobi, therefore, would emerge as a giant exchange with more innovations and profit in the future.

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