Kraken Enables Crypto Collateral Trading Under EU’s MiFID Framework

• Kraken enables crypto collateral trading under EU MiFID and MiCA frameworks.
• Integration links Ireland, Cyprus, and UK entities for unified liquidity access.
• Institutional demand drives regulated crypto derivatives expansion in Europe.

Kraken has begun allowing traders in the European Union to post cryptocurrency as collateral through its Markets in Financial Instruments Directive (MiFID)-regulated derivatives platform, marking a large expansion of its regulatory footprint across the bloc. The update follows the exchange’s authorization under the Markets in Crypto-Assets (MiCA) regime by the Central Bank of Ireland earlier this year.

The move follows Kraken’s rollout of derivatives trading for European clients in May, which initially permitted only fiat collateral. According to Alexia Theodorou, Kraken’s Director of Derivatives, the firm worked closely with European regulators to enable the use of digital assets as collateral within the MiFID framework.

She noted that the company engaged with both the Cyprus Securities and Exchange Commission (CySEC) and the European Securities and Markets Authority (ESMA) to clarify the classification of perpetual futures and ensure compliance with regional rules.

“When we launched under MiFID in Europe, there was no regulated crypto custodian live under MiCA,” Theodorou said, explaining that early restrictions prevented the use of crypto collateral until the regulatory structure was finalized.

Integration Across European and UK Markets

Kraken’s updated model integrates its MiCA-licensed Irish entity for custodial services with its MiFID-regulated Cyprus operation and its UK-regulated Multilateral Trading Facility (MTF). This setup enables the exchange to offer European clients access to global liquidity without separating EU and non-EU trading pools, a feature Theodorou described as a distinguishing characteristic of the platform.

European users can now post crypto collateral while remaining under MiFID oversight, which sets capital and conduct standards for financial markets in the EU. The exchange applies varying collateral haircuts based on the volatility of the deposited assets, and all margin calculations are converted into U.S. dollars to standardize risk management.

Theodorou stated that institutional participants, particularly those with existing digital-asset exposure, have consistently requested the option to use crypto as collateral. She added that the regulated rollout may bring additional trading activity and liquidity into the European derivatives market.