Kraken debuts Bitcoin Vault for managed BTC yields

Kraken has introduced Bitcoin Vault, a new Kraken Earn product that lets eligible users earn rewards on their Bitcoin holdings.

The product offers up to 2.5% APY, with rewards paid in Bitcoin rather than a separate incentive token.

Kraken said the product targets long-term Bitcoin holders who want to keep BTC exposure while earning extra BTC-denominated returns.

Bitcoin Vault uses managed on-chain strategies, allowing users to access lending-based yield without directly managing decentralised finance positions.

The product is available through Kraken web, Kraken Pro web, the Kraken app, the Kraken Pro app and the Krak app.

Kraken said Bitcoin Vault is not available in the UK, the UAE or Australia, while access may differ across other jurisdictions.

Bitcoin has usually served as a long-term store-of-value asset rather than an asset with native yield.

Kraken’s new product aims to address that gap by placing BTC into a vault that can generate rewards through lending activity.

Users can allocate BTC from their Kraken balance into Bitcoin Vault, where the funds move into Bitcoin lending markets.

Borrowers pay to access the liquidity, while users receive automatically accrued rewards in BTC over time.

Kraken said paying rewards in Bitcoin allows users to keep direct exposure to the asset they already hold.

The company said Bitcoin Vault runs on infrastructure powered by Veda.

Kraken also said Sentora handles strategy design and risk curation for the product.

The exchange said the vault may allocate funds across established on-chain protocols, including Aave, Morpho, Tydro and others.

The launch reflects a wider trend where centralised crypto platforms package decentralised finance products into simpler user experiences.

Instead of asking users to bridge assets, manage wallets or track lending protocols, Kraken places the strategy inside its Earn platform.

This approach could attract Bitcoin holders who want yield opportunities but do not want to manage complex on-chain risks themselves.

Kraken describes the product process as allocation, on-chain deployment and automatic reward accrual.

Users can request withdrawals at any time, although Kraken said funds may take up to five days to return after a deallocation request.

Bitcoin Vault charges a 25% performance fee on rewards, while Kraken said displayed APYs are already shown net of fees.

The product arrives as more investors search for ways to make long-term Bitcoin holdings more productive.

Unlike Ethereum and some proof-of-stake assets, Bitcoin does not create native staking rewards at the protocol level.

That has pushed demand towards lending products, wrapped Bitcoin structures and other on-chain strategies that can generate returns.

Kraken said its earlier USDC Vaults product has attracted more than $240million in assets since launching in January.

Bitcoin Vault still carries meaningful risk despite its simplified user experience.

Kraken warned that rewards can change, returns are not guaranteed and users could lose some or all of their assets.

The company also highlighted risks linked to smart contract bugs, exploits, oracle failures, bridge issues, liquidations, price volatility, gas fees and network congestion.

Kraken said it does not control the third-party protocols used by the product.

The exchange describes Bitcoin Vault and DeFi Earn as unregulated products provided by Payward Wallet, LLC.

The warning matters because some Bitcoin holders may understand simple spot ownership better than DeFi-based lending strategies.

Kraken’s launch shows how crypto platforms are trying to turn Bitcoin from a passive holding into an asset that can take part in on-chain yield markets.

The product may appeal to users seeking extra Bitcoin rewards, but the convenience does not remove the underlying market and protocol risks.

At the time of reporting, Bitcoin price was $75,117.06.