Kraken Flexline Lets Traders Borrow Without Selling

Key Insights

• Kraken launched Flexline crypto-backed loan product.
• Rates ranged from 10% to 25%.
• DeFi lending TVL stood at $51.9 billion.

Kraken launched Flexline on Wednesday, offering crypto-backed loans to Kraken Pro users without requiring asset sales. The exchange said borrowers could access funds almost instantly by pledging supported digital assets as collateral.

The move expanded Kraken’s credit offerings as demand for crypto-backed lending rebounded across centralized and decentralized platforms.

Kraken positioned Flexline within a broader revival of crypto-backed lending, a segment that had contracted after multiple platform failures in 2022.

The company introduced fixed-rate loans with terms ranging from two days to two years, allowing users to receive proceeds in crypto or stablecoins tradable on the platform.

This structure allowed traders to maintain market exposure while accessing liquidity, aligning with a renewed appetite for collateralized borrowing tied to volatile assets.

Loan Terms And Immediate Market Positioning

Kraken’s announcement stated that annual percentage rates ranged from 10% to 25%, depending on the loan structure and asset pledged.

The exchange did not disclose specific loan-to-value ratios, though it confirmed that collateral would be liquidated if maintenance thresholds were breached or repayment failed at maturity.

Borrowers could repay early using their account balance, but the platform imposed an early repayment fee.

Kraken Announcement Details

The company restricted Flexline’s availability across several jurisdictions, excluding Australia, Brazil, Canada, India, New Zealand, Switzerland, the United Arab Emirates, the United Kingdom, and the United States.

That regional filter reflected ongoing regulatory fragmentation in digital asset credit markets. While Kraken expanded its derivatives and tokenized equity offerings for eligible non-U.S. clients this week, it maintained tighter controls around retail lending exposure.

Collateral under Flexline remained in segregated wallets and formed part of Kraken’s Proof of Reserves attestations. The exchange said those attestations verified client assets on a one-to-one basis. That structure aimed to address transparency concerns that surfaced during prior centralized lending collapses.

On-Chain Lending Data Signals Sector Recovery

DeFiLlama data showed that decentralized lending protocols held about $51.9 billion in total value locked, with roughly $30.8 billion in active borrowing. That borrowing ratio suggested sustained utilization across smart contract lending pools despite past volatility.

Aave accounted for nearly half of that liquidity, with just under $26.9 billion in locked assets, while the Morpho protocol followed with around $5.8 billion.

Institutional capital also entered the segment. On Feb. 15, Apollo Global Management partnered with Morpho to support blockchain-based lending infrastructure.

The $940 billion asset manager indicated it could acquire up to 90 million MORPHO tokens as part of the collaboration. That step signaled institutional confidence in on-chain credit rails despite previous downturns.

Meanwhile, exchange-based lending also broadened. Coinbase expanded its collateralized loan product to support additional digital assets, enabling eligible U.S. users to borrow up to $100,000 in USD Coin against tokens such as XRP, Dogecoin, Cardano, and Litecoin without selling.

That expansion mirrored Kraken’s strategy of allowing traders to preserve upside exposure while unlocking short-term liquidity.

Product Structure Reflects Post-2022 Risk Controls

Kraken described its primary platform as geared toward beginners and individual investors, while Kraken Pro targeted advanced and institutional traders. Flexline operated exclusively within the Pro environment, signaling a focus on experienced participants familiar with leverage and liquidation mechanics.

That segmentation reduced retail exposure while maintaining liquidity options for active traders.

The exchange also announced tokenized equity perpetual futures on its regulated derivatives platform one day earlier. Eligible non-U.S. clients gained continuous leveraged exposure to major U.S. stock indexes, gold, and individual companies such as Apple, Nvidia, and Tesla.

The launch suggested Kraken pursued a broader multi-asset trading model rather than a narrow crypto-only strategy.

Outside the exchange sector, U.S. mortgage lender Rate introduced RateFi, allowing qualified borrowers to use verified cryptocurrency holdings to satisfy underwriting requirements without liquidating assets. Digital holdings could count as reserves and, in some cases, income.

That integration indicated crypto collateral increasingly intersected with traditional finance underwriting models.

Kraken’s Flexline, therefore, entered a market where centralized exchanges, decentralized protocols, and traditional lenders all tested crypto-backed credit structures under tighter compliance oversight. The renewed activity suggested that collateralized borrowing regained traction as asset prices stabilized and institutional actors returned.

The next inflection point for crypto-backed lending will likely depend on regulatory clarity in the United States and cross-border markets. If policy frameworks stabilize in the coming quarters, exchanges may broaden geographic availability.

Platforms such as Kraken will likely confine expansion to jurisdictions with defined digital asset lending rules.

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