Crypto Exchange Kraken Introduces Its Wrapped Bitcoin Token, kBTC

Crypto exchange Kraken has introduced its tokenized Bitcoin, known as Kraken Wrapped Bitcoin (kBTC).

Introducing $kBTC – an ERC-20 token fully backed 1:1 by Bitcoin, held securely by Kraken and always verifiable onchain.

More possibilities.
More functionality.
More transparency.

Let’s take a closer look ⤵️ pic.twitter.com/VammHbyJKm

— Kraken Pro (@krakenpro) October 17, 2024

According to the firm’s blog post, the new token represents Kraken’s Bitcoin (BTC) holdings, with each kBTC backed 1:1 by an equivalent amount of Bitcoin held in the exchange’s custody.

The kBTC token is an ERC-20 asset that operates on networks such as Ethereum and OP Mainnet (previously known as Optimism). It allows users to access decentralized applications (DApps) using BTC. Kraken stated that the token is intended to extend Bitcoin’s functionality to new networks, utilizing the company’s experience in security and custodial services.

DeFi Adoption

Kraken stated that kBTC aims to reinforce Bitcoin’s status as a central figure in the crypto ecosystem. It also encourages crypto developers to explore innovative ways to integrate Bitcoin, thereby contributing to the growth of the entire ecosystem.

According to the exchange, kBTC will be supported by several blue-chip decentralized finance (DeFi) platforms, with partners including Kraken, Kraken Wallet, Ethereum, Optimism, Paraswap, Yearn, Gauntlet, deBridge, Definitive, CowSwap, Beefy, Velodrome, Curve, and Morpho.

Initially, there will be no spot trading markets available for kBTC. However, Kraken clarified that users can redeem kBTC for the underlying Bitcoin and trade it as usual. The minimum deposit requirement for kBTC on Ethereum and Optimism is 0.00026 BTC.

The token launch is part of Kraken’s broader mission to drive DeFi adoption, with the exchange expecting kBTC to become widely utilized across the ecosystem.

Wrapped BTC Tokens on the Rise

Wrapped tokens allow cryptocurrencies like Bitcoin and Ether (ETH) to be utilized on DeFi platforms for trading, lending, and borrowing. 

Kraken is not the only crypto exchange that has ventured into wrapped Bitcoin tokens. Last month, Coinbase introduced its wrapped Bitcoin product, Coinbase Wrapped BTC (cbBTC), on the Ethereum and Base networks.

Meanwhile, BitGo, the sole custodian for the largest wrapped token, WBTC, announced a partnership with Tron founder Justin Sun. This has led to some concerns, as WBTC plays a significant role in DeFi as collateral and has a market capitalization of around $10 billion.