Kraken Launches Bitcoin Vault Offering Up to 2.5% BTC-Denominated Yield
Kraken has launched Bitcoin Vault within its Earn suite, letting customers earn up to 2.5% APY paid in bitcoin without selling their holdings. The yield is generated through third-party DeFi lending strategies, and the product is unregulated and carries the risk of partial or total loss.
Written by CoinArticle’s AI Newsroom · from 2 cited sources. How we work
What Kraken Launched
Kraken has introduced Bitcoin Vault, a product within its Kraken Earn suite that pays customers a variable rate of up to 2.5% APY in bitcoin on BTC they already hold. The company said the product is available through its web interface, Pro platform, mobile app and the Krak app, in all operating jurisdictions except the United Kingdom, the United Arab Emirates and Australia.
According to Kraken, setup takes seconds from within an existing account. Bitcoin Vault is classified as an unregulated product provided by Payward Wallet, LLC, a Kraken subsidiary.
How the Yield Is Generated
Customer deposits are routed into on-chain vaults built on infrastructure from DeFi firm Veda, with strategy design and risk curation handled by Sentora. Sentora allocates capital across established lending protocols including Aave, Morpho and Tydro. Kraken said it does not control those third-party protocols.
The sources differ on fees. Decrypt reports that the providers take a 25% performance fee from rewards, and that the 2.5% headline figure is inclusive of that fee. Bitcoin Magazine's account does not mention a performance fee. Readers should treat the net rate as the figure after that fee, per Decrypt's reporting, pending confirmation from Kraken's own product terms.
Decrypt also reports a 5-day processing and return period for withdrawals, even though customers can remove funds at any time. Bitcoin Magazine does not address withdrawal timing. Kraken has said the rate comes from on-chain strategies rather than token subsidies or promotional rates.
Risk Disclosures and Regulatory Context
Kraken disclosed to Bitcoin Magazine that users face technological, market and operational risks, including the possibility of losing some or all of their assets. Decrypt noted that previous centralized-exchange yield products have drawn regulatory attention. It cited settlements tied to Gemini Earn after the FTX collapse, in which customers were alleged to have been misled about program risks, and an SEC investigation of BlockFi's high-yield bitcoin and ether lending products.
Competitive Backdrop
Bitcoin Magazine frames the launch as part of a broader push by exchanges to give holders a reason to keep assets on-platform rather than in cold storage. Kraken pointed to its USDC Vaults, launched in January 2026, which it said crossed $240 million in assets without incentive programs. Kraken said that BTC holders represent the largest share of its customer base. The company is targeting an initial public offering later in 2026, and Bitcoin Magazine says competitors including Coinbase and Binance have also been building yield products.
John Zettler, Director of Product at Kraken Earn & Trade, said in a statement that "Bitcoin Vault is built for that mindset."
Why It Matters
For Traders
Customers who move BTC into the vault may face a 5-day withdrawal and return period, so liquidity needs should be weighed before depositing.
For Investors
Exchanges adding yield to BTC custody signals a shift in how platforms compete for holders, which could affect where long-term bitcoin is held.
For Builders
Routing exchange custody through third-party lending protocols via Veda and Sentora shows a template for CeFi-to-DeFi yield products that other platforms may copy.
This article is for information only and is not financial advice. Read the full disclaimer.
