Kraken has expanded its crypto product suite through a new partnership with STS Digital, a firm that builds derivatives-based investment tools for digital assets.
The exchange has started offering Dual Investment through STS Digital’s structured products platform, giving eligible users another way to seek returns on Bitcoin and Ether.
The rollout places Kraken within a wider push across the crypto sector to package options strategies into simpler products for both institutions and selected retail clients.
Kraken adds structured products through STS Digital
STS Digital said it launched a structured products platform for digital assets on Wednesday, with Kraken as its first distribution partner. Kraken connected to the platform through an API and now uses it to power its Dual Investment product. The product offers eligible clients fixed returns tied to Bitcoin and Ether under predefined terms.
The launch adds another layer to Kraken’s expanding derivatives business. Alexia Theodorou, Kraken’s director of derivatives, said the partnership broadens the exchange’s product range by adding structured strategies such as covered calls. She said these products give clients another route to seek returns outside of staking or lending.
Kraken appears to be taking a measured approach in the early stage of the rollout. STS Digital chief executive Maxime Seiler said the integration entered a soft beta in select regions about a week and a half before the public announcement. He also said Kraken’s version of the product will not offer the full range of platform customization available to institutional users, but rather a defined set of structures and payout profiles.
The arrangement also links Kraken more closely with STS Digital after Payward, Kraken’s parent company, joined the firm’s February funding round. STS Digital raised $30 million in that round, led by CMT Digital, with support from Payward and other backers. The company said the funds would support expansion of its crypto options platform and broader access for institutional clients.
How Dual Investment and structured products work
Structured products combine one or more financial tools into a single investment product with a preset payoff profile. In crypto markets, these products often rely on options and other derivatives to create a defined outcome at maturity. STS Digital said its platform lets clients access strategies that aim to generate yield or manage exposure to digital assets.
Seiler told The Block that the product format is a way to turn complex derivatives into a simpler investment package.
“Structured products, essentially, package up options and package up complex products into a simple investment product that gives you a defined payout at maturity,” he said.
That framework has long been common in traditional finance, where banks and asset managers use similar structures to shape risk and return.
One example is a principal-protected or partially protected note. Seiler said an investor who wants Bitcoin exposure could use such a structure to limit downside while still keeping some upside link to the asset.
“Your worst case scenario is you lose 20 percent of your capital if the market crashes, so 80 percent of your principal is protected,” Seiler added.
Another example is a yield enhancement note. In that setup, an investor may sell options and collect premiums if the market stays within a certain range. Seiler said those premiums can vary widely, from low single-digit returns to much higher annualized levels, depending on the structure. That range shows why these products can appeal to investors who want more tailored exposure than spot holdings alone can offer.
STS targets institutions while Kraken tests wider access
STS Digital said its main audience includes banks, funds, family offices, and high-net-worth individuals seeking risk-managed exposure to digital assets. The firm’s platform lets users configure products by choosing the underlying derivative, maturity, strike price, and payout structure. That modular setup gives institutional participants room to match products to their own market view and risk profile.
Kraken’s rollout takes a narrower path. Seiler said the exchange will offer a selected group of products with fixed structures, rather than a fully customized menu. He said,
“It’s going to be a defined set of products and payoffs on their platform, and clients can subscribe into it.”
That design may help Kraken simplify a complex product category for users in regions where the offering is allowed.
STS Digital also pointed to its regulatory position as part of the platform’s appeal. The company said it operates under a Bermuda Monetary Authority license. Seiler added that the firm is regulated in Bermuda as a custodian, derivatives exchange, and market maker, which allows it to act as a principal dealer in crypto options.
Even with that framework, structured products remain complex. These instruments can carry risks linked to volatility, liquidity, counterparty exposure, and the exact terms of each contract. Crypto markets can add another layer of uncertainty because price swings can move faster than in many traditional asset classes, and that can affect expected payouts or exit options.
Crypto firms widen the market for packaged investment products
The STS Digital launch arrives as more firms roll out products that bring structured finance ideas into digital assets. On Tuesday, Omnes and Apex Group said they plan to tokenize the Omnes Mining Note, an institutional-grade structured note tied to Bitcoin hashrate. The product aims to give institutional investors direct economic exposure to newly produced Bitcoin through a tokenized format.
Kraken’s move also fits a broader pattern in the company’s recent strategy. The exchange has pushed deeper into derivatives and other market infrastructure while also pursuing projects tied to traditional finance rails.
Separate reports have linked Kraken to work on tokenized stocks with Nasdaq, aimed at letting tokenized equities move between regulated venues and on-chain marketplaces while keeping issuer rights intact.
On March 4, Kraken made history as the first crypto exchange to obtain access to the U.S. Federal Reserve payment network.