Kraken users will be able to stake their Bitcoin, the U.S. crypto exchange giant announced in a Thursday blog post.
The San Francisco, California-based company said that customers can lock their BTC up on the platform and earn rewards as BABY token thanks to the Bitcoin protocol, Babylon.
"A substantial amount of Bitcoin currently sits idle on our exchange, representing a significant opportunity cost for clients and a missed opportunity for the broader ecosystem," Kraken Global Head of Consumer Mark Greenberg said in the post. "With this launch, clients can now earn a return on their BTC while also enabling emerging PoS blockchains to benefit from the economic weight of Bitcoin in order to validate transactions and bolster the security of their networks."
The Babylon BTC staking feature will only be available in the U.S. (excluding California, Maine, Maryland, New Jersey, New York, Washington, and Wisconsin), the U.K., Australia and the United Arab Emirates, Kraken said.
Last year, Decrypt reported that crypto startup Babylon was raising cash to allow Bitcoin investors to stake their assets. BABY is the project's native token.
Staking is the process of pledging proof-of-stake coins or tokens to a network to help it function in exchange for rewards that could accrue in value.
Those who hold PoS assets—such as Ethereum or Solana—pledge it to the network by sending it to a specific blockchain address. Stakers may then receive rewards for as long as they keep their assets locked up.
Bitcoin isn't a PoS coin—the network uses a proof of work consensus to process transactions on the blockchain. But Babylon's technology will allow Kraken customers to use their BTC as collateral to secure proof-of-stake networks.
Kraken has been riding tailwinds in recent months after the U.S. Securities and Exchange Commission dropped enforcement actions against it and two other crypto firms, ConsenSys, and Cumberland DRW LLC.
In April, Kraken started offering stocks and exchange-traded fund trading in certain states and the District of Columbia, adding traditional financial products to its core trading features.
Bitcoin was recently trading at about $104,300, roughly flat as the U.S. celebrated the Juneteenth holiday.
Edited by James Rubin
