Kraken and Maple launch on-chain institutional lending

Cryptocurrency exchange Kraken has partnered with institutional lending platform Maple to launch an on-chain financing facility designed to support its over-the-counter lending business. Announced on Thursday, the new structure allows institutional clients to borrow USDC stablecoins using their Bitcoin and Ethereum holdings as collateral, providing liquidity without requiring them to sell their digital assets.

The facility replicates a traditional finance model known as warehouse financing, commonly used to fund products like auto loans and mortgages before they are packaged into larger investment vehicles. Maple will provide senior capital through a bankruptcy-remote special purpose vehicle, a legal structure intended to protect the assets within the facility. Kraken will originate, service, and sell the loans while also taking a junior, first-loss position, meaning it absorbs initial losses before Maple's senior lenders are affected. The exchange stated this design aligns incentives between borrowers, lenders, and the platform.

Collateral for the loans will be held by Kraken Financial, a Wyoming-chartered Special Purpose Depository Institution that acts as a regulated...