Kraken, a well-known cryptocurrency exchange, has introduced its self-custody wallet for digital assets. This move follows the footsteps of other popular exchanges such as Binance, OKX, Coinbase, Bitget, and Bybit. The Kraken Wallet app supports a variety of cryptocurrencies including Bitcoin, Ethereum, Solana, Optimism, Base, Arbitrum, Polygon, and Dogecoin. It aims to serve as a bridge to the decentralized financial system, allowing users to access it regardless of whether they are Kraken clients or not.
Kraken emphasizes the security and privacy features of its wallet. The app collects only the necessary data to function as a wallet and does not gather internal app performance analytics. To enhance security, the wallet incorporates mobile biometrics and user password protection. The code of the app has undergone an audit by Trail of Bits and is open-source, available on GitHub.
In terms of functionality, Kraken Wallet supports decentralized finance tokens, nonfungible tokens, and interaction with decentralized applications through Wallet Connect. Additionally, it offers round-the-clock customer support.
Eric Kuhn, the product director for Kraken Wallet, highlights the importance of self-custody wallets in enabling permissionless financial access. He describes Kraken Wallet as an investment in the “your keys, your crypto” ecosystem.
The increasing adoption of self-custody wallets by exchanges can be attributed to the tightening regulatory landscape they face globally. Kraken, for instance, recently announced the winding down of support for the privacy coin Monero for customers in Ireland and Belgium. Last year, the exchange suspended support for several stablecoins for its Canadian users.
Self-custody wallets operate under different regulations compared to money transmitters like exchanges. They are not subject to the same rules regarding fiat money transactions. This was evident when the European Parliament eliminated the 1,000 euro limit on cryptocurrency payments from self-hosted wallets as part of new Anti-Money Laundering laws. Similarly, a U.S. District Judge ruled that Coinbase Wallet is not considered a broker and therefore does not need to comply with brokerage rules set by the Securities and Exchange Commission.
In related news, the Trust Wallet iOS app is currently under investigation by the United States due to a vulnerability.