Crypto exchange Kraken has launched a crypto wallet. It is a self-custody wallet built with open-source code. Hence, it is not a new version of the Kraken exchange app but a standalone wallet for everyone.
Below is Kraken’s X post about the wallet launch.
Meet the brand new Kraken Wallet: simple, secure, powerful.
🗝️ Manage multiple wallets
🌐 Multi-chain support
📊 Manage NFTs & DeFi positions
🔒 IP privacy & Encryption
📖 No client side trackingDownload now ⤵️https://t.co/EYHweJGDzV pic.twitter.com/jLbldh9j6k
— Kraken Exchange (@krakenfx) April 17, 2024
Kraken also launched a bug bounty program related to the wallet, rewarding users who report vulnerabilities and other bugs. The wallet initially supports eight blockchains: Bitcoin, Ethereum, Solana, Optimism, Base, Arbitrum, Polygon, and Dogecoin. The wallet has received a positive reception on social media.
Product manager Eric Kuhn commented on the launch as follows.
Kraken has been telling people for more than ten years to self-custody their assets. We built Kraken Wallet on the principles central to the crypto space, such as user privacy and open source code. There’s a lot of interesting things that are happening on-chain and we wanted a wallet that enables people to go and access these ecosystems.
The collapse of the FTX exchange helped many crypto investors understand the risks associated with holding crypto on an exchange. The demand for self-custody wallets has increased significantly since the incident. In addition to Kraken, other major crypto exchanges have also released a self-custody wallet.
Read more about different wallet options and their advantages in this article: Crypto wallets explained.
Self-custody wallet vs. crypto exchange app
A crypto exchange launching a self-custody wallet might sound confusing for novice users. What is the benefit of transferring your cryptos from the Kraken app to the Kraken wallet?
Below is a picture from the Google Play Store with the Kraken app and the Kraken wallet.
You don’t control your coins when you store cryptos in an exchange. The crypto exchange manages your wallet’s private keys, and you have to trust that the exchange will keep your funds safe. The exchange may block access to your funds anytime, or you may lose them for other reasons, such as hacks or bankruptcy.
Storing cryptos on an exchange is often a choice for beginners who don’t want (or dare) to install a wallet app and take responsibility for the storage.
However, 2022 changed the minds of many investors. In addition to the FTX exchange, we saw the bankruptcy of Celsius and half a dozen other large-scale companies. Millions of investors’ funds were stuck in bankruptcy for years, and only a part will be recovered.
As a result, people’s awareness of other storage options has increased. Many have decided to transfer their assets to a self-custody wallet.
In a self-custody wallet, the funds are always 100% under your control. For example, Kraken has no access to any of the Kraken wallets. A self-custody wallet is a perfect way to store your crypto assets if you are careful and keep your keys safe. However, with freedom comes responsibility. A self-custody wallet is only as secure as its administrator.
A self-custody wallet can be a mobile app (like the Kraken wallet) or a hardware wallet like Ledger Nano X. Some wallets also work as browser add-ons. Some wallets can be installed on a computer, but the trend is increasingly towards mobile apps.
Major crypto exchanges have developed wallets due to increased interest in self-custody. These wallets can have various features linked to the crypto exchange, making it easier to engage customers who want to self-custody their assets.
Coinbase’s wallet is perhaps the most well-known of such wallets, and it has extensive support in the DeFi world. Binance launched a wallet earlier this year. We have written an in-depth guide about Crypto.com’s defi wallet if you are interested.
Summary
- The US crypto exchange Kraken has launched a self-custody wallet
- More and more crypto investors want to manage their coins themselves
- It is essential to understand the difference between a self-custody wallet and an exchange app