Crypto exchange Kraken has enabled traders in the European Union to post crypto assets, including Bitcoin (BTC), Ethereum (ETH), and select stablecoins, as collateral when trading perpetual futures on its MiFID-regulated derivatives platform, Kraken Pro. The update, officially announced on November 3, makes the exchange one of the first regulated venues in Europe to support crypto-collateralized perpetual futures contracts.
The new feature allows clients to use their digital assets directly as margin without converting them into fiat currencies. This brings improved capital efficiency, faster access to liquidity, and reduced transaction costs for both retail and institutional traders. The move also comes under a solid regulatory framework, with custody governed by MiFID II and MiCA supervision.
“This launch completes the broader derivatives offering we’ve built for the EU,” said Alexia Theodorou, Kraken’s Director of Derivatives, in an interview with The Block. “It also helps secure our position as the biggest European perpetual offering.”
Built on a framework of regulatory clarity
Kraken’s introduction of crypto collateral within the EU follows months of cooperation with European regulators. The exchange operates under multiple licenses and approvals, including a Markets in Crypto-Assets (MiCA) license from the Central Bank of Ireland, a MiFID-regulated entity in Cyprus, and a Multilateral Trading Facility (MTF) approval from the UK’s Financial Conduct Authority.
“When we launched with MiFID under Europe, we did not yet have MiCA or an operational European crypto custodian,” Theodorou explained. “At that time, it was agreed with the regulator that crypto collateral couldn’t be offered under a European regime. But as regulations evolved and our framework expanded, it’s now possible.”
Kraken is using its Irish entity to custody client collateral while leveraging its UK MTF to provide global liquidity to European traders.
“This structure means we don’t have to separate international and European liquidity, all liquidity is hosted under our UK MTF. That’s what makes us unique,” Theodorou added.
Flexible collateral, compliance, and capital efficiency
European traders can now post crypto collateral within a MiFID-regulated environment, combining the flexibility of digital assets with the security of a licensed financial framework. Kraken applies volatility-based margin haircuts to manage risk, ensuring that collateral requirements adapt to market conditions.
The platform also margins crypto collateral back to USD, automatically converting the value of digital assets for margin and liquidation calculations. This method provides consistency and clarity in risk management, reducing unexpected liquidation risks during high volatility periods.
Depending on the collateral’s volatility, different risk parameters apply, a system already common in traditional financial derivatives. As a result, clients can benefit from the speed and flexibility of crypto-based trading while remaining inside established European compliance standards.
Unlocking new strategies for advanced traders
Under the new rules, Kraken Pro clients can use BTC, ETH, and stablecoins as margin for over 150 perpetual futures markets, with leverage of up to 10x. This opens new avenues for strategy building and portfolio diversification, including:
- Cross-asset hedging: Traders can use ETH holdings as collateral to short ETH/USD perpetuals without selling their spot positions.
- Stablecoin-backed directional trades: Clients can post stablecoins as margin to take long or short positions in BTC or ETH, skipping fiat conversions.
- Treasury optimization: Institutional traders can keep crypto exposure while leveraging capital efficiently across multiple positions.
Theodorou noted that institutional clients, particularly crypto-native funds, had been requesting this feature for some time.
“Being able to post BTC or ETH as collateral under a regulated European regime could unlock even more flows and balances into our order book,” she said.
A milestone for regulated crypto derivatives in Europe
Kraken’s expansion of its derivatives product suite under European regulation marks a significant milestone for the continent’s evolving digital asset landscape. The launch underscores growing coordination between exchanges and regulators, paving the way for broader institutional participation in crypto derivatives trading.
The move follows a strong quarter for Kraken, which recently reported $648 million in Q3 revenue, a 50% increase from Q2, driven by heightened trading activity and product innovation following its acquisition of NinjaTrader.
By combining regulatory compliance, liquidity access, and trading innovation, Kraken aims to strengthen its footprint as Europe’s most robust venue for perpetual futures and crypto-collateralized products.
Anastasiia G
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