Following in the footsteps of Coinbase, which has acted as a Bitcoin custodian for most BTC ETF issuers, Kraken intends to enter the cryptocurrency ETF race and become a custodian for Ethereum.
Kraken is expected to join the cryptocurrency ETF custodian race pending the approval of the Ethereum ETF, according to CoinGape.
Coinbase has become the custodian for eight of the 11 spot Bitcoin ETFs launched in January this year. Fox crypto journalist Eleanor Terrett reported that Kraken is preparing to replicate that success and grab a significant share of crypto ETFs.
As the hype around Bitcoin ETFs has come to an end, Kraken wants to jump on the second wagon and take on the role of custodian of spot Ethereum ETFs, which could be approved as early as May. This would also allow the exchange to strengthen its position in the cryptocurrency transactions.
While Coinbase has won the race as the custodian of most Bitcoin ETFs, it will also want to represent issuers of spot Ether ETFs. Therefore, the exchanges are likely to act as rivals in this battle. Kraken will face serious competition from Coinbase, which has already been named as an Ethereum custodian for BlackRock, Grayscale, and Franklin Templeton, which have applied for approval of spot Ether ETFs.
In late January, the SEC delayed its review of BlackRock's spot Ethereum ETF application.
On February 13, asset manager Franklin Templeton Fund filed an application to launch a spot Ethereum ETF, which it believes will provide investors with easier access to the underlying altcoin. According to the Form S-1 filed with the SEC, the Franklin Ethereum Trust will track the price of Ethereum. Cryptocurrency exchange Coinbase and Bank of New York Mellon will serve as custodians of Ethereum and cash, respectively.
The filing underscores the firm's strategy to expand the use of cryptocurrencies through direct investment in Ethereum, but without the complexities associated with handling digital assets.
Franklin Templeton's spot Ethereum ETF is notable for including a staking option, which allows the fund to earn rewards by participating in the ETH consensus mechanism.
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