Kraken is this big cryptocurrency exchange that a lot of people trust. They just came out with something called Flexline. It’s a loan product where you can borrow money using your crypto as backing.
The idea is to let users get some cash without having to sell off their digital assets. That way traders or whoever holds crypto can keep their stuff but still have liquidity. It mixes in the collateral from crypto with interest rates that are supposed to be pretty competitive.
According to what Kraken says, you borrow funds and put up supported cryptocurrencies for it. The rates are annual percentages, APR, and they go from about 10% up to 25% or so. I think that makes it cheaper than some other ways to get credit out there. It offers flexibility with the debt too, but I’m not totally sure how that all plays out exactly.
Collateral is held in segregated wallets and included in Kraken’s Proof of Reserves attestations, which the exchange says verify client assets on a 1:1 basis. Collateral may be liquidated if maintenance requirements are breached or the loan reaches maturity without repayment.
Kraken said loans can be repaid early using an account balance, but are subject to an early repayment fee. The product is not available in Australia, Brazil, Canada, India, New Zealand, Switzerland, the United Arab Emirates, the United Kingdom or the United States.
The new features come a day after Kraken announced tokenized equity perpetual futures on its regulated derivatives platform, giving eligible non-US clients 24/7 leveraged exposure to major US stock indexes, gold and individual companies such as Apple, Nvidia and Tesla.
Related: Kraken sponsors Trump Accounts in Wyoming, citing crypto alignment
Crypto-backed lending gains momentum across exchanges, DeFi and traditional finance
Kraken’s launch comes amid a broader resurgence in crypto-collateralized lending across exchanges, decentralized finance and even traditional financial institutions.
Coinbase recently expanded its collateralized loan product to support additional digital assets, allowing eligible US users to borrow up to $100,000 in USDC (USDC) against tokens including XRP (XRP), Dogecoin (DOGE), Cardano (ADA) and Litecoin (LTC) without selling.
Outside the exchange sector, US mortgage lender Rate introduced RateFi, a program that enables qualified borrowers to use verified cryptocurrency holdings to meet underwriting requirements without liquidating their assets, permitting digital assets to count as reserves and, in some cases, income.
Meanwhile, decentralized lending markets continue to scale. DeFi lending protocols hold about $51.9 billion in total value locked (TVL), with about $30.8 billion actively borrowed, according to DefiLlama data.
Aave accounts for nearly half of that total with just under $26.9 billion in TVL, followed by Morpho protocol at around $5.8 billion.
Institutional capital is also moving deeper into the niche. On Feb. 15, Apollo Global Management partnered with Morpho to support blockchain-based lending infrastructure, with the $940 billion asset manager saying it could acquire up to 90 million MORPHO tokens as part of the collaboration.
Magazine: Clarity Act risks repeat of Europe’s mistakes, crypto lawyer warns
