Kraken announces its own Wrapped Bitcoin on Ethereum

Kraken has entered the Wrapped Bitcoin race with the launch of its own Ethereum-based token, kBTC. The announcement, made on October 17, reveals that kBTC is fully backed 1:1 by Bitcoin held in Kraken Financial, a Wyoming-chartered depository institution. This means that for every kBTC issued, an equivalent amount of Bitcoin is held in reserve, which Kraken claims clients can verify themselves through on-chain transparency.

Key Features of Kraken’s kBTC:

• 1:1 Backing: Each kBTC is backed by an equivalent amount of Bitcoin held in Kraken’s reserve.
• Ethereum Network: Built on Ethereum, the token operates as an ERC-20 token, making it compatible with a wide range of decentralized applications (dApps).
• Interoperability with OP Mainnet: kBTC also supports interoperability with the OP Mainnet (formerly Optimism), broadening its use case beyond just Ethereum.
• Security Audit: Kraken enlisted Trail of Bits, a New York-based cybersecurity firm, to conduct a thorough audit of the kBTC ERC-20 smart contract, ensuring its security.

This launch comes just one month after Coinbase introduced its own Wrapped Bitcoin, cBTC, available on Ethereum and Base. It also follows increased scrutiny of Wrapped Bitcoin (wBTC), especially after BitGo partnered with BiT Global in Hong Kong, raising concerns over the control of wBTC potentially shifting to entities connected to TRON founder Justin Sun.

Kraken’s Strategic Move:

Kraken’s move to introduce kBTC highlights the growing competition in the Wrapped Bitcoin space, which allows Bitcoin holders to use their BTC in the Ethereum ecosystem and other blockchains via a wrapped token. With transparency, security audits, and interoperability, Kraken aims to capture market share in this rapidly expanding segment.