Kraken Rolls out Bitcoin Vault With 2.5% APY for Long-Term BTC Holders in the US

Kraken Bitcoin Vault Goes Live: BTC Holders Can Now Earn Yield

The new product sits inside Kraken’s Earn suite alongside its existing decentralized finance ( DeFi) Earn offerings for USDC and other assets. Users deposit bitcoin directly from their Kraken account, with a minimum of approximately 0.00006 BTC required to get started.

Once deposited, the bitcoin is wrapped into kBTC and moved to a non-custodial embedded wallet on the Ink network. Kraken handles wallet management through Privy OTP verification, so users do not need to manage external wallets or seed phrases.

From there, a Veda-powered vault deploys the funds using a strategy managed by Sentora. The approach supplies kBTC as collateral to lending protocols, including Aave and Morpho, borrows stablecoins against it, and routes those stablecoins into reward-generating DeFi positions. Rewards convert back to kBTC and redeploy automatically.

The yield is quoted at approximately 2.0% net of fees, with a ceiling near 2.5% APY during the initial launch period. Rates are variable, based on borrowing demand in underlying DeFi lending markets, and displayed as trailing seven-day averages. Rewards accrue continuously and compound without manual input.

John Zettler, director of product for Kraken Earn and Trade, said the product responds to a clear signal from users. He stated:

“Many bitcoin holders on Kraken have made it clear they want simple ways to earn on the bitcoin they already plan to hold.”

Withdrawals are available at any time, but funds go through a five-day deallocation period before returning to a user’s Everyday balance. Deposits process in seconds through the Kraken web platform, Kraken Pro, Kraken app, Kraken Pro app, or the Krak app.

Bitcoin Vault is live in most jurisdictions where Kraken operates. The United Kingdom, United Arab Emirates, and Australia are excluded. The product is offered by Payward Wallet, LLC.

Kraken is explicit about the risks. Yields are not guaranteed and can fall to zero or turn negative under stressed market conditions. Smart contract bugs, oracle failures, and protocol exploits are listed as potential hazards. The strategy uses leverage, which amplifies sensitivity to price moves. There is no insurance equivalent to traditional savings products, and users face the possibility of partial or total loss of principal.

The product is distinct from staking. It uses DeFi lending mechanics rather than proof-of-work or proof-of- stake validation, and Kraken makes that distinction clear in its disclosures.

Bitcoin Vault extends the same infrastructure Kraken rolled out earlier in 2026 for stablecoin DeFi Earn vaults. Those products, also powered by Veda and Sentora, pulled in more than $240 million in reported inflows at competitive APYs. Extending the model to Bitcoin gives the exchange a way to monetize idle BTC balances at scale.

The launch follows Kraken’s 2025 integration with Babylon for native Bitcoin staking and fits a broader industry push toward what some call productive Bitcoin, a category where holders generate yield without transferring custody or navigating DeFi manually. Protocols like Solv have pursued similar approaches.

Early community response noted fast onboarding and appeal for holders sitting on long-term BTC positions, though some users flagged DeFi risks given recent security incidents in the space. APYs and product terms may shift as borrowing demand evolves; users should confirm current rates directly inside their Kraken account.