Kraken Partners With Bitwise to Offer Yield Strategy for Institutional Clients
What Has Kraken Launched?
Kraken Institutional has rolled out its first managed investment strategy for clients, partnering with Bitwise Asset Management to offer a yield-focused approach built around BTC holdings. The product, known as the Bitwise Custom Yield Strategy, allows institutional investors to earn income on crypto assets that would otherwise remain idle.
Under the arrangement, Bitwise manages the portfolio strategy while Kraken provides custody, trade execution, and risk oversight. Assets remain within Kraken’s custody throughout the process, addressing a long-standing concern among institutions about moving crypto across multiple platforms to access yield opportunities.
The launch represents Kraken Institutional’s initial move beyond core , introducing managed strategies directly within its institutional framework. According to the platform, additional external managers and investment strategies are expected to follow as the platform expands its offering.
Investor Takeaway
How the Bitwise Strategy Works
The Bitwise Custom Yield Strategy focuses initially on BTC and uses a covered call options approach. Bitwise trades call options against BTC held in custody, collecting option premiums as income. This structure is widely used in traditional markets to generate yield on underlying assets that are expected to trade within a range.
The option income can provide a partial buffer during market declines, as premiums earned may offset some losses if BTC prices fall. At the identical time, the strategy limits upside participation during strong rallies, since gains above the strike price of the sold options are effectively given up.
For institutional investors, this trade-off may be acceptable in platform for predictable income, particularly during periods of lower volatility or sideways markets. The approach is designed for portfolio allocation rather than directional trading, with risk controls handled by the asset manager and operational oversight handled by Kraken.
Why Kraken Is Expanding Into Managed Strategies
Many institutions now hold crypto assets on balance sheets or within funds but generate little or no yield from those positions. Accessing structured strategies has often required coordinating across custodians, derivatives venues, and asset managers, increasing operational burden and legal complexity.
Kraken’s framework is designed to address that gap by allowing external managers to run strategies while client assets remain on the platform. This reduces the need for asset transfers and simplifies governance for institutions that prefer consolidated infrastructure.
The move also reflects a broader trend among large crypto service providers to deepen relationships with institutional clients by offering integrated products rather than stand-alone services. By embedding into its platform, Kraken is positioning itself closer to the role played by prime brokers in traditional markets.
“This offering represents the first of multiple strategies as we build the infrastructure institutions need to access diverse crypto opportunities with confidence,” Gurpreet Oberoi, head of Kraken Institutional, said in comments shared with The Block.
Investor Takeaway
What This Means for Institutional Crypto Portfolios
Covered call strategies are familiar to , but their application to crypto has often been limited by market structure and custody constraints. By pairing a regulated asset manager with an established platform, the Kraken–Bitwise setup lowers barriers that have previously kept some institutions on the sidelines.
The model also highlights how platforms are adapting as matures. Rather than focusing solely on transaction volume, platforms are increasingly looking to support longer-term portfolio use cases, including yield generation, risk management, and capital efficiency.
Kraken has indicated that more strategies and external managers will be added over time, suggesting a move toward a broader menu of managed products. If adopted at scale, this approach could reduce reliance on bespoke, multi-provider arrangements and bring crypto portfolio construction closer to established institutional norms.
