Kraken launches Bitcoin Vaults offering up to 2.5% APY

Kraken announced Wednesday that it has launched Bitcoin Vaults, a product that offers up to 2.5% APY in Bitcoin-denominated rewards. Rewards accrue automatically to users’ Kraken accounts and withdrawals are subject to a five-day processing and return period.

When users deposit BTC into the Bitcoin Vaults, Kraken routes the funds to on-chain vaults powered by DeFi infrastructure firm Veda. Institutional DeFi firm Sentora manages risk and strategy, building and executing lending and borrowing strategies on public protocols including Aave, Morpho and Tydro to generate yield.

Kraken said the advertised up-to-2.5% rate reflects the expected return after a 25% performance fee is taken by the strategy providers.

Customers can deposit into the Bitcoin Vaults directly from their Kraken accounts. Rewards are paid out in Bitcoin and credited automatically. Deposits can be made at any time, but withdrawals require a five-day processing and return period before funds are available again.

John Zettler, Kraken’s Earn & Trade director of product, wrote in a statement: “Many Bitcoin holders on Kraken have made it clear they want simple ways to earn on the Bitcoin they already plan to hold. Bitcoin Vault is built for that mindset. It gives customers a way to earn rewards on their Bitcoin through an experience that is easy to access and grounded in the trust Kraken has built over time.”

Kraken emphasized that the rewards are generated by on-chain strategies rather than token subsidies or promotional rates.

The launch follows regulatory scrutiny of yield products offered by centralized crypto platforms. Gemini’s Earn program was wound down and later resolved through settlements, and the U.S. Securities and Exchange Commission investigated BlockFi over its high-yield lending products. Those regulatory actions and settlements focused on how risks and returns were presented to customers.

Kraken positioned Bitcoin Vaults as a custody-based option that uses on-chain lending markets while assigning strategy execution and risk controls to third-party DeFi firms.