Kraken Launches Bitcoin Vault, Letting Users Earn Up to 2.5% APY on BTC Holdings

Kraken has launched Bitcoin Vault, a new product inside Kraken Earn that gives Bitcoin holders a way to earn BTC-denominated rewards while maintaining exposure to Bitcoin.

The product allows eligible users to earn up to 2.5% APY on BTC holdings through managed onchain strategies. Kraken says the product is aimed at long-term Bitcoin holders who want their BTC to generate rewards without having to directly interact with DeFi protocols or manage complex onchain positions themselves.

Bitcoin Vault is now available through Kraken Earn on Kraken web, Kraken Pro web, the Kraken app, Kraken Pro app, and the Krak app. However, Kraken says the product is not available in the UK, UAE, and Australia, with availability varying by jurisdiction.

Kraken Brings Bitcoin Yield to Long-Term Holders

Bitcoin has traditionally been seen as a long-term store-of-value asset rather than a yield-generating asset. Kraken’s new Bitcoin Vault product is designed to address that gap by allowing users to allocate BTC into a vault that generates rewards from onchain lending activity.

According to Kraken, users can deposit BTC from their Kraken balance into the vault, where funds are allocated to Bitcoin lending markets. Borrowers then pay to access that liquidity, while rewards accrue automatically in BTC over time.

The key point is that rewards are paid in Bitcoin, not in a separate incentive token. Kraken says this allows users to keep Bitcoin exposure while earning Bitcoin-denominated rewards.

Powered by Veda With Strategy Design From Sentora

Kraken said Bitcoin Vault is powered by Veda, with strategy design and risk curation handled by Sentora. The exchange said the strategy infrastructure is designed to allocate vault funds across established onchain protocols, including Aave, Morpho, Tydro, and others.

This makes the product part of a broader trend: centralized crypto platforms are increasingly trying to make DeFi products easier to access through simplified user experiences.

Instead of requiring users to bridge assets, manage wallets, track protocols, or monitor positions manually, Kraken is packaging the strategy inside its Earn platform. This could appeal to Bitcoin holders who want yield opportunities but do not want to directly manage DeFi risk.

How Bitcoin Vault Works

Kraken describes the product as a three-step process.

First, users allocate BTC from their Kraken balance into Bitcoin Vault. Then, the BTC is deployed into onchain lending strategies. Finally, rewards accrue automatically and can be withdrawn after the user requests deallocation.

Kraken’s product page says withdrawals can be requested at any time, but funds may take up to five days to return after a withdrawal request. The product also charges a 25% performance fee on rewards, while Kraken says displayed APYs are net of fees.

A New Push for Bitcoin-Based DeFi Products

Bitcoin yield products have become a growing area of interest as more investors look for ways to put long-term BTC holdings to work. While Ethereum and other proof-of-stake assets have clearer native staking mechanisms, Bitcoin does not generate yield at the protocol level.

That has created demand for alternative products that use lending, wrapped Bitcoin, or other onchain strategies to generate returns.

Kraken’s Bitcoin Vault enters this market by focusing on simplicity. The exchange says the product is built for users who already plan to hold Bitcoin but want a more accessible way to earn rewards on that position.

The launch also follows Kraken’s earlier success with Vault-style products. Kraken said its USDC Vaults product has surpassed $240 million in assets since launching in January, driven by organic growth without incentives.

Bitcoin Vault Comes With Onchain and Market Risks

Despite the simplified user experience, Bitcoin Vault is not a risk-free product.

Kraken states that rewards are variable and not guaranteed, and users can lose some or all of their assets. The company also warns that interacting with onchain smart contracts involves risks such as bugs, exploits, oracle failures, MEV-related issues, bridge failures, price volatility, liquidation risks, gas fees, and network congestion.

Kraken also notes that it does not control third-party protocols used in the product. Bitcoin Vault and DeFi Earn are described as unregulated products provided by Payward Wallet, LLC.

This risk disclosure is especially important because the product targets Bitcoin holders, many of whom may be more familiar with simple spot holding than with DeFi-based lending strategies.

Why This Matters for Bitcoin Holders

Kraken’s Bitcoin Vault launch shows how the market for Bitcoin yield is evolving.

For years, Bitcoin holders had limited ways to earn on BTC without taking on counterparty risk, using wrapped assets, or interacting with complex DeFi platforms. Kraken is now trying to bring that experience into a more familiar exchange environment, while still relying on onchain lending strategies behind the scenes.

The product may appeal to users who want to keep holding Bitcoin but are looking for incremental BTC-denominated rewards. However, the higher simplicity does not remove the underlying risks tied to onchain protocols and market conditions.

Conclusion

Kraken’s Bitcoin Vault gives eligible users a new way to earn BTC rewards on Bitcoin holdings through Kraken Earn.

The product offers up to 2.5% APY, uses managed onchain lending strategies, and is designed to simplify Bitcoin yield for long-term holders. At the same time, Kraken’s own disclosures make clear that rewards are variable, losses are possible, and users remain exposed to smart contract, market, and operational risks.

For Bitcoin holders, the launch marks another step in the growing push to turn BTC from a passive holding into an asset that can participate in onchain yield markets.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Cryptocurrency products, including onchain yield products, involve risk and may not be suitable for all users.