KEY TAKEAWAYS
- Kraken Custody has been approved by the Ethena Risk Committee to provide custody services for USDe’s backing assets, emphasizing robust risk management.
- Kraken Custody offers institutional-grade services with asset segregation and security, aligning with Ethena’s standards for managing USDe.
- Starting January 2026, Kraken Custody will enhance transparency with monthly custodian attestations and weekly Proof of Reserves reporting.
Kraken Custody has been approved by the Ethena Risk Committee (ERC) to provide custody services for the backing assets of USDe. This decision follows a comprehensive review process and highlights Ethena’s commitment to robust risk management and institutional-grade infrastructure.
The ERC, an independent body elected by Ethena DAO governance, is responsible for evaluating risk factors associated with the Ethena Protocol. The collaboration with Kraken Custody underscores Ethena’s focus on disciplined risk management practices.
Kraken Custody’s Institutional-Grade Services
Kraken Custody operates as a qualified digital asset custodian under a U.S. state-chartered bank. It is designed to cater to sophisticated institutional clients, offering active operational workflows while ensuring transparency, asset segregation, and security.
Assets held for Ethena are maintained in fully segregated, bankruptcy-remote, cold-storage vaults. This approach aligns with best practices for asset protection and operational resilience.
Gurpreet Oberoi, Head of Kraken Institutional, stated that the engagement reflects Kraken’s ability to support complex institutional workflows with robust security and compliance standards. He emphasized that Kraken Custody combines regulatory clarity, strong controls, and deep operational expertise to support critical infrastructure for digital asset markets.
Ethena’s Commitment to Secure Custody
Guy Young, Founder of Ethena, noted that custody is a core risk decision for the organization. Selecting Kraken Custody reinforces the Ethena Risk Committee’s commitment to scaling USDe on infrastructure that meets institutional expectations. He highlighted the alignment of Kraken Custody’s regulatory framework, operational controls, and security architecture with Ethena’s standards for managing USDe’s backing assets.
Kraken Custody’s security architecture includes multiple layers of protection, such as hardware security modules (HSMs) and multi-party computation (MPC), supported by in-house security teams. The platform supports a wide range of digital asset organizations, including publicly listed companies, venture firms, asset managers, hedge funds, and investment funds.
Starting in January 2026, Kraken Custody will participate in Ethena’s transparency processes, which include monthly custodian attestations and weekly Proof of Reserves reporting. This initiative aims to enhance visibility into the backing of USDe.
For more details, the announcement can be found here.
Why This Matters: Impact, Industry Trends & Expert Insights
Kraken Custody’s approval to support Ethena’s USDe backing assets marks a significant step in institutional-grade digital asset management, emphasizing security and compliance.
A recent Liminal Custody report highlights the growing trend of institutional adoption in digital asset custody, with a focus on compliance, multi-custodian strategies, and integration with DeFi and tokenization. This aligns with Ethena’s decision to partner with Kraken Custody, which underscores the importance of robust risk management and institutional infrastructure.
A report by AInvest emphasizes Kraken Custody’s role in providing qualified institutional custody solutions that combine advanced security protocols with regulatory compliance. This supports Ethena’s commitment to secure custody and highlights the strategic importance of partnering with a custodian like Kraken to enhance the security and trust of USDe’s backing assets.
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