Spot Bitcoin ETFs Drive Kraken’s Licensing Revenue Boom

Spot Bitcoin ETFs Fuel Kraken’s Licensing Revenue Increase

Crypto News- Kraken’s acquisition of CF Benchmarks in 2019 has proven to be a masterstroke, yielding substantial profits in a market increasingly embracing spot Bitcoin ETFs.

CF Benchmarks: The Backbone of Bitcoin ETFs

As the world’s leading crypto indices provider, CF Benchmarks plays a pivotal role as an authorized benchmarks administrator in the Bitcoin ETFs market. This advantageous position has enabled Kraken to benefit from the growing demand for Bitcoin ETFs, leading to millions in licensing fees.

Revenue Surge Amid Bitcoin Spot ETF Boom

The cryptocurrency trading platform Kraken is now generating millions in licensing fees from CF Benchmarks, its subsidiary acquired in 2019. While Kraken has not disclosed the exact purchase amount, it was a nine-figure sum. In 2022, the pseudonymous researcher Hide Not Slide predicted Kraken’s substantial earning potential through CF Benchmarks.

Kraken doesn’t dominate the crypto market share, but it possesses an asset I believe will become a top revenue generator over time — CF Benchmarks. This is the index provider for CME’s crypto futures products. If CME crypto futures continue to grow, Kraken will hold significant market power.

Approval of 11 Spot Bitcoin ETFs: A Game Changer

This prediction came to fruition with the approval of 11 spot Bitcoin ETFs on January 10, 2024. CF Benchmarks CEO Sui Chung highlighted the significance of these new ETFs for both the asset class and his company.

“The spot ETFs have been a huge step forward for the asset class and, by extension, a huge milestone for CF Benchmarks as a business, given our role as the leading index provider for the asset class. This has allowed us and our parent, Kraken, to expand our offerings to institutions that are in, and entering, the space,” Chung told BeInCrypto. Chung revealed that February’s inflows had surpassed $1.4 billion, exceeding his one-year revenue target within just one month. Major funds issued by BlackRock, Ark Invest, and Franklin Templeton utilize the BRR index, solidifying CF Benchmarks’ market dominance.

Financial Windfall for CF Benchmarks

“By the time I’d done all the maths it was 1 AM,” Chung said, referring to the February figures where inflows had topped $1.4 billion. “In one month, the Bitcoin ETFs had hit my one-year target, and the Bitcoin ETF boom was just getting started.”

Sustained Growth and Future Prospects

According to DefiLlama, investors have poured over $57 billion into Bitcoin ETFs, enabling CF Benchmarks to earn substantial licensing fees. While CF Benchmarks does not disclose its earnings, it is expected to continue generating significant revenue. For instance, S&P Dow Jones charges clients about 3 basis points, or 0.03%, on assets based on its S&P 500 indexes. With State Street’s ETF managing $541 billion, S&P earns $162 million in fees from this single fund. With Ethereum ETFs expected this summer, CF Benchmarks looks poised for further growth.

Commitment to Transparency and Reliability

CF Benchmarks enforces stringent rules to ensure the trustworthiness of their indices. Exchanges must prevent fraud and adhere to strict KYC and AML checks to be listed in the index. The BRR gathers pricing data from multiple platforms, including Kraken, Coinbase, and Gemini, but excludes Binance due to regulatory issues. This commitment to transparency and reliability enhances the strong reputations of both CF Benchmarks and Kraken in the crypto market.

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