Cryptocurrency exchange Kraken has announced that Cardano (ADA) is now supported as a collateral cryptocurrency on its futures platform.
It also supports such cryptocurrencies as Chainlink (LINK), Polkadot (DOT), Decentraland (MANA), and others.
The native token of one of the leading proof-of-stake protocols can now be used for getting exposure to dozens of cryptocurrency futures contracts. Kraken offers singe-collateral futures and multi-collateral futures. As the name suggests, the first type of futures contracts only allows users to use the base cryptocurrency of a certain pair in the form of collateral. At the same time, the second type lets traders deposit a slew of cryptocurrencies as collateral, meaning that they are not restricted to the base currency. It is worth noting that the ADA token has a 10% “haircut,” which is a cut in the margin value of the collateral. For instance, if one’s balance is 1,000 ADA tokens, 900 ADA tokens count toward as collateral that can be used for backing orders.
The size of the haircut varies for different cryptocurrencies: from 0% for Bitcoin (BTC) to 50% for Avalanche (AVAX) and Tezos (XTZ).
Notably, users are not allowed to withdraw collateral currencies if their spot positions on margin remain open.
In February 2019, Kraken acquired futures trading startup Crypto Facilities for an undisclosed sum of money. In July 2020, the subsidiary obtained a U.K. license.
In 2021, it paid a $1.25 million fine to the Commodity Futures Trading Commission (CFTC) after being accused of offering illegal margined crypto transaction services.
Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at firstname.lastname@example.org.
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