Kraken taps Upshift to help institutions earn returns on idle Bitcoin, Ether and stablecoins

Kraken Institutional is turning to Upshift, a crypto-native asset manager, to build dedicated vaults that put idle Bitcoin, Ether and stablecoins to work. The vaults will be tailored to each client’s specific investment strategy and risk appetite, the exchange’s institutional arm said Wednesday.

The move marks a shift from the traditional custodian model, where digital assets sit untouched in cold storage. Instead, these vaults are designed to generate yield on holdings that would otherwise earn nothing – a persistent pain point for treasury desks, family offices and fund managers who need liquidity but also want capital efficiency.

Upshift, which already manages structured yield products for a handful of large crypto holders, will handle the construction and ongoing rebalancing of each vault. Kraken Institutional provides the custody layer and the client base. The firms did not disclose the fee split or the minimum asset size required for participation.

“Institutions want to hold their own coins and maintain control, but they also need returns that compete with traditional fixed income,” said one person familiar with the deal. “This is a direct answer to that gap.”

The service supports Bitcoin, Ether and several major stablecoins. For Ether specifically, yield can come from staking or liquid staking tokens, while Bitcoin lending and structured notes tied to DeFi protocols offer another revenue stream. Stablecoin holders can park cash in money-market-like strategies or short-duration credit funds.

For Kraken, the partnership reinforces its push deeper into institutional services. The exchange has been expanding prime brokerage, custody and over-the-counter trading in recent quarters, trying to capture a larger slice of the fast-growing market for regulated crypto finance.

What to watch next: how Upshift structures the risk disclosures and whether the vaults qualify for institutional accounting treatment as separately managed accounts. That will determine if pension funds and endowments – the deepest pool of dry powder – can participate.