coindesk.com
Kraken has launched cash-settled bitcoin BTC$64,348.58 and ether (ETH) options, positioning the product as the first step in a broader push to grow, rather than simply compete for, the crypto options market.
The exchange on Thursday introduced European-style, USD-settled options on bitcoin and ether through Kraken Pro, initially via request-for-quote (RFQ). The contracts are available to eligible international clients outside of Europe, North America, and Australia, with a European rollout planned for a later date.
Alexia Theodorou, Kraken's director of derivatives, said the exchange sees crypto options as an underpenetrated segment compared with traditional financial markets, where options account for a much larger share of derivatives trading.
"Crypto options activity is still a fraction of what it is in traditional markets, but the gap is closing as professional and institutional capital continues to move into digital assets," Theodorou told CoinDesk in an interview.
Kraken's launch comes as competition in crypto derivatives intensifies, with exchanges and traditional financial firms racing to expand their offerings as institutional demand grows.
Derivatives account for the vast majority of crypto trading volumes, but options remain a relatively small corner of the market, dominated by a handful of established venues including Deribit, CME Group and Binance. New entrants are increasingly betting that broader adoption of options will follow the institutionalization of digital assets.
The move is the latest step in Kraken's transformation from a crypto exchange into a broader financial platform offering trading, payments and other digital asset services.
Growing the market, not just market share
Rather than focusing solely on taking market share from incumbent venues, Theodorou believes the larger opportunity is expanding the addressable market by making options easier to use.
"The existing options market in crypto has been built for a narrow slice of the trader base," Theodorou said.
"Our offering broadens access through a straightforward, dollar-settled contract in the same account clients already use for spot and futures," she added.
A retail-first approach
According to Theodorou, the slow growth of crypto options is less a demand problem than a product design problem.
“The gap in crypto options isn't demand, it's design,” Theodorou said.
She notes that existing crypto options platforms have largely catered to institutional traders and market makers, while retail traders instead have gravitated toward perpetual futures, which became the industry's dominant speculative product because of their relative simplicity.