Cryptocurrency exchange Kraken has launched Flexline, a crypto-backed loan product that allows Kraken Pro users to borrow their digital assets without selling them.
According to Wednesday’s announcement, the fixed-rate loans will have terms ranging from two days to two years, and proceeds will be issued in cryptocurrencies or stablecoins, which can be traded or withdrawn on the platform depending on regional eligibility.
The company describes its eponymous product as “aimed at beginners and individual investors, while Kraken Pro is aimed at advanced and institutional investors.”
Flexline allows customers to pledge supported cryptocurrencies as collateral and receive funds almost instantly. According to Kraken’s website, annual interest rates range from 10% to 25%, but the exchange did not disclose specific loan-to-value ratios.
Collateral is stored in a segregated wallet and included in Kraken’s proof of margin, which the exchange says provides one-to-one verification of customer assets. The collateral may be liquidated if maintenance requirements are breached or if the loan matures without being repaid.
sauce: kraken
Kraken said loans can be repaid early using account balances, but there will be an early repayment fee. This product is not available in Australia, Brazil, Canada, India, New Zealand, Switzerland, United Arab Emirates, United Kingdom, or United States.
This new feature comes a day after Kraken announced tokenized equity perpetual futures on its regulated derivatives platform, offering eligible non-US customers 24/7 leveraged exposure to major US stock indexes, gold, and individual companies such as Apple, Nvidia, and Tesla.
Related: Kraken sponsors Wyoming Trump account due to cryptocurrency linkage
Crypto-backed lending gains momentum across exchanges, DeFi, and traditional finance
Kraken’s launch comes amid a widespread resurgence in cryptocurrency-backed lending across exchanges, decentralized finance, and even traditional financial institutions.
Coinbase recently expanded its secured loan product to support additional digital assets, allowing eligible U.S. users to borrow up to $100,000. $USDC ($USDC) for tokens containing $XRP ($XRP), Dogecoin (DOGE), Cardano (ADA), Litecoin (LTC) without selling.
sauce: coinbase
Outside of the exchange space, U.S. mortgage lender Rate introduced RateFi, a program that allows eligible borrowers to use verified cryptocurrency holdings to meet underwriting requirements without liquidating assets, allowing digital assets to count as reserves and, in some cases, as income.
Meanwhile, the decentralized lending market continues to expand. According to DefiLlama data, DeFi lending protocols have approximately $51.9 billion in total value locked (TVL), with approximately $30.8 billion actively borrowed.
Aave accounted for almost half of that total, with a TVL of just under $26.9 billion, followed by the Morpho protocol at about $5.8 billion.
On-chain lending protocol. sauce: Defilama
Institutional investors are also moving deeper into niche areas. On February 15, Apollo Global Management announced that it is partnering with Morpho to support blockchain-based lending infrastructure, and that the $940 billion asset management company can acquire up to 90 million Morpho tokens as part of the partnership.
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