Kraken Just Became the Only Regulated Venue Offering Leveraged Crypto to US Retail

Two weeks ago we covered the race to bring regulated perpetual futures to the US market. This week Kraken moved first, not with perps, but with spot margin trading, the product that has been denied to US retail traders for years.

As of May 6, US traders can access up to 10x leverage on Kraken Pro through a CFTC-registered entity, with no accredited investor requirement. For funded traders operating in the US, this is the most significant structural change to the domestic leverage landscape since the ETF approvals.

Until this week, regulated margin trading in the US was restricted to Eligible Contract Participants, meaning institutions and high-net-worth individuals with portfolios above $10 million. Retail traders who wanted leverage had two options: go without, or go offshore.

Kraken Pro's spot margin trading is now offered through a CFTC-registered entity, available to all eligible US Kraken Pro traders, with up to 10x leverage long or short. Traders use their existing crypto holdings as collateral without needing to sell them. Every cost is disclosed before committing to a position.

The infrastructure behind this is Bitnomial, a Chicago-based derivatives exchange that holds Futures Commission Merchant, Designated Contract Market, and Derivatives Clearing Organization licenses from the CFTC, the full stack of regulatory licenses required to operate a compliant derivatives venue in the US. This launch is the first product built on those newly acquired Bitnomial licenses, with perpetuals and options expected later.

The gap this closes has shaped how US traders have accessed leverage for years.

Offshore venues offered no consumer protection, no transparency requirements, and no recourse when things went wrong. US traders accepted that risk because there was no regulated alternative. Kraken has now changed that equation directly.

The significance for the prop trading ecosystem is specific. Funded traders in the US have been using CLEO, a platform built on Binance liquidity, as their route to leveraged crypto execution precisely because Bybit and most offshore perp venues restrict US residents. That workaround has worked well, but it has always carried the implicit risk of offshore counterparty exposure.

Kraken's regulated offering does not replace CLEO for prop trading purposes today. The leverage cap of 10x is well below the 100x available on offshore venues, and Kraken's product is spot margin rather than perpetual futures, which means no funding rate mechanism, no mark price system, and no perpetual rollover. The liquidation mechanics are fundamentally different from what funded traders are used to on perp-based platforms.

Kraken plans to expand regulated derivatives offerings following the acquisition, with future products potentially including perpetual futures contracts and crypto options for US users.

That roadmap is what matters most for prop trading. Regulated US perpetual futures on Kraken would represent a genuine alternative to offshore venues for the first time, one that could eventually influence which exchange backends prop firms use for US trader execution.

The timeline is unclear. Kraken's parent company Payward has also confidentially submitted a draft S-1 registration statement to the SEC, indicating potential plans for a public listing. A public company has stronger incentives to maintain regulatory compliance and build durable infrastructure than a private exchange operating offshore. That changes the long-term risk profile of trading on Kraken-backed products.

The honest answer is that Kraken's spot margin launch does not change the day-to-day experience for most funded traders today. Prop firm challenges are built around perpetual futures mechanics, including funding rates, mark price liquidation, and drawdown tracking against a perpetual position. Spot margin does not replicate that environment.

What it does change is the competitive context for prop firms serving US traders. The argument for offshore execution has always been that there was no regulated US alternative. That argument is now weaker, and it will get weaker still when perpetuals arrive on Kraken.

A few things funded traders should watch:

• Whether Kraken's perpetual futures, when they launch, offer leverage levels that are compatible with prop challenge structures rather than capped at 10x

• Whether prop firms operating under CLEO begin exploring Kraken as a regulated backend option for US traders as Breakout already does

• Whether the CFTC framework Kraken operates under becomes the model that other US exchanges follow, which would accelerate the entire onshore regulated leverage market

The offshore workaround era for US crypto leverage is not over. But this week it got a clear expiry date. For risk management purposes, understanding the difference between regulated onshore margin and offshore perp execution is now a genuine part of the US funded trader's toolkit. You can read how Mubite handles challenge rules for US traders in the full rules breakdown.