By appointing Kraken as custodian, Ethena reinforces USDe’s infrastructure with bank-chartered security, transparent reserves management, and institutional-grade compliance for growing stablecoin use.
Kraken has been selected to provide institutional custody services for the Ethena USDe stablecoin, following approval from Ethena’s independent Risk Committee. The decision marks a key step in Ethena’s effort to reinforce the infrastructure supporting USDe as the stablecoin continues to scale.
USDe is designed to maintain a dollar peg through a delta-neutral strategy, which relies on carefully managed collateral and hedging positions. Because of this structure, custody of the backing assets plays a critical role in the protocol’s stability. By appointing Kraken Custody, Ethena is placing those assets under a regulated, bank-chartered custody framework built for institutional use. The move signals a clear focus on governance, compliance, and operational rigor as USDe grows its footprint across the crypto market.
Governance Review Behind the Custody Appointment
The decision to appoint a new custodian followed a structured governance process. Ethena’s Risk Committee, a body established by the DAO, is responsible for reviewing choices that could materially affect the protocol’s safety and resilience. Finding a qualified digital asset custodian was treated as a strategic risk consideration rather than a routine operational matter.
Before approving Kraken, the committee assessed how different custody models would impact transparency, asset protection, and regulatory clarity. Particular attention was given to how reserves would be held, how clearly ownership could be verified, and how the custodian would perform under stressed market conditions. The approval reflects the committee’s conclusion that Kraken’s stablecoin custody framework aligns with Ethena’s long-term goals of disciplined growth and institutional credibility.
Inside Kraken’s Regulated Custody Offering
Kraken Custody operates under a U.S. state banking charter, qualifying it as a regulated digital asset custodian. This structure provides clear legal and regulatory parameters around how client assets are managed. For Ethena, this translates into greater certainty around reserve handling and reporting standards.
Kraken, as a crypto custody partner, is designed to support institutional workflows, including treasury management and active risk strategies, without compromising asset security. Ethena also gains full visibility into how its collateral is stored and accounted for. This level of transparency was a key factor in the selection process, ensuring that USDe’s backing assets can be independently verified and monitored over time.
Cold Storage and Asset Segregation Model
Under the new arrangement, USDe’s collateral will be held in segregated cold storage vaults. Each asset backing the stablecoin is stored on a one-to-one basis, separated from Kraken’s corporate funds and operational accounts. This legal and operational separation ensures that Ethena’s reserves remain protected even in extreme scenarios.
The cold storage setup is designed to be bankruptcy-remote, meaning the assets cannot be accessed by Kraken’s creditors. By isolating reserves in dedicated vaults, the custody model mirrors practices commonly used by traditional financial institutions and large asset managers. For Ethena, this approach reduces counterparty risk and strengthens confidence in the stablecoin’s backing structure.
Security Systems Supporting Institutional Custody
Kraken Custody’s security framework combines multiple layers of protection. It relies on hardware security modules and multi-party computation systems to protect private keys and securely authorize transactions.
Private keys and transaction approvals are safeguarded using hardware security modules and multi-party computation, reducing single points of failure. These technical controls are paired with continuous monitoring and oversight by Kraken’s internal security teams.
This setup has already been deployed across a wide range of institutional clients, including trading firms, funds, and corporate treasuries. By leveraging an infrastructure that has been tested at scale, Ethena benefits from a custody environment designed to withstand both technical threats and operational errors.
Views From Both Sides of the Partnership
Representatives from both organizations have framed the partnership as a foundation-building step rather than a short-term announcement. Gurpreet Oberoi, Head of Kraken Institutional, says ‘This engagement reflects our ability to support complex institutional workflows with robust security and compliance standards’. Therefore, the focus is on providing a secure, compliant environment that can adapt as institutional crypto usage expands.
Guy Young, the founder of Ethena, emphasizes that ‘For Ethena, custody is a core risk decision. Selecting Kraken Custody reinforces the Ethena Risk Committee’s commitment to scaling USDe on infrastructure built to meet institutional expectations.
The shared emphasis on security and compliance underscores a common goal of long-term stability.
Ongoing Reporting and Transparency Commitments
Transparency commitments form a central part of the arrangement. Beginning in January 2026, Kraken Custody will issue regular attestation reports confirming how USDe’s backing assets are held. These reports will complement Ethena’s existing Proof of Reserves crypto disclosures, which are published on a frequent basis.
By formalizing these reporting processes, Ethena aims to provide market participants with consistent, verifiable insight into its collateral. This level of disclosure is increasingly expected by institutional users, particularly those evaluating stablecoins for treasury or settlement use.
Implications for Institutional Stablecoin Adoption
USDe has grown to a multibillion-dollar market capitalization, and Ethena has paired that growth with incremental infrastructure upgrades. Rather than prioritizing yield alone, the protocol has focused on diversifying custodians and strengthening governance processes.
Kraken’s involvement reinforces this approach. For institutional desks, custody arrangements are a core component of crypto risk management. The addition of a regulated, bank-chartered custodian sends a signal that USDe is designed with enterprise use cases in mind, potentially widening its appeal among more conservative market participants.
Conclusion: Building a Stronger Base for USDe
The appointment of Kraken Custody marks a meaningful step in Ethena’s evolution. By combining governance-led decision-making with regulated custody services, the protocol is reinforcing the foundation that supports USDe’s peg and growth.
As stablecoins continue to move toward mainstream financial use, custody quality and transparency are becoming as important as token mechanics. Through this partnership, Ethena is positioning USDe as a stablecoin backed not only by assets, but by infrastructure built to institutional standards.