Kraken’s Flexline Crypto-backed loans start at 10–25% APR
Crypto exchange Kraken has launched Flexline, a crypto-backed lending product that allows Kraken Pro users to borrow against their digital assets without selling them.
According to Wednesday's announcement, the fixed-rate loans have terms ranging from two days to two years, with proceeds that can be traded in crypto or stablecoins on the platform or issued as regional qualifiers.
The company describes the eponymous product as “intended for beginners and individual investors, while Kraken Pro is for advanced and institutional traders.”
Using Flexline, customers can post supported cryptocurrencies as collateral and receive funds instantly. Annual percentage rates range from 10% to 25%, according to Kraken's website, although the exchange does not disclose specific loan-to-value ratios.
Collateral is held in distributed wallets and included in Kraken's Rev of Reserves verifications, which the exchange claims verify client assets on a 1:1 basis. If maintenance requirements are breached or the loan reaches maturity without repayment, the bond may be forfeited.
Kraken said loans can be repaid early using the account balance, but early repayment is required. 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 equity futures on its regulated securities platform, giving qualified non-US clients 24/7 exposure to major US stock indices, gold and private companies such as Apple, Nvidia and Tesla.
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Crypto-backed lending increases the speed of exchanges, Defi and traditional finance
Kraken's launch comes amid a broader resurgence in crypto-collateralized credit exchanges, decentralized finance, and even traditional financial institutions.
Coinbase recently expanded its collateralized lending product to support more digital assets, allowing eligible US users to borrow up to $100,000 in USDC (USDC) in non-selling tokens like XRP (XRP), Dogecoin (DOGE), Cardano (ADA) and Litecoin (LTC).
Outside of the currency sector, US mortgage lender RateFi has introduced RateFi, which allows eligible borrowers to meet written requirements for verified cryptocurrency holdings without requiring assets, digital assets to be considered reserves and, in some cases, income.
Meanwhile, decentralized credit markets continue to expand modestly. Defillama's loan protocols hold about $51.9 billion in total value locked (TVL), with about $30.8 billion actively lent, according to Defillama data.
Ave accounted for just under $26.9 billion of the total in TVL, followed by Morpho Protocol at nearly half at $5.8 billion.
Institutional capital is also running deep. On February 15, Apollo Global Management partnered with Morpho to support a blockchain-based credit infrastructure, and the $940 billion asset manager said it could acquire up to 90 million MORPHO tokens as part of the partnership.
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