KEY FACTS: Kraken announced the launch of FlexLine on February 26, 2026, a new crypto-backed loan product exclusively for Kraken Pro users (advanced and institutional traders) that enables borrowing against digital asset collateral at fixed interest rates of 10–25% APR, with flexible terms ranging from two days to two years. Borrowers receive funds in crypto or stablecoins for on-platform trading or off-platform withdrawal (where permitted), while collateral is held in segregated wallets, included in Kraken's Proof of Reserves attestations, and subject to potential liquidation if maintenance requirements are not met or upon maturity default; a 0.5% origination fee applies, interest accrues every four hours, and early repayment incurs additional fees. The service is currently unavailable in major jurisdictions including the United States, United Kingdom, Canada, Australia, Brazil, India, New Zealand, Switzerland, and the United Arab Emirates.

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Source: Kraken

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Kraken Launches "FlexLine" Fixed-Rate Crypto-Backed Loans for Pro Traders

Kraken, one of the longest-standing cryptocurrency exchanges, has officially rolled out FlexLine, a new crypto-backed loan product designed to help users access liquidity without liquidating their digital asset holdings. Announced on February 25, 2026, FlexLine targets Kraken Pro users, advanced and institutional traders, allowing them to post supported cryptocurrencies as collateral and borrow funds almost instantly. The loans are issued in crypto or stablecoins, which can be used for trading directly on the Kraken platform or withdrawn off-platform (subject to regional restrictions and limits).

Unlike variable-rate margin trading or the often complex and risk-prone decentralized finance (DeFi) protocols, FlexLine offers fixed interest rates ranging from 10% to 25% APR, depending on the loan term and borrowed currency. Terms are flexible, spanning from as short as two days to as long as two years, providing borrowers with predictable costs and defined repayment schedules.

Kraken emphasizes transparency and security in the product. Collateral is held in segregated wallets and incorporated into the exchange's ongoing Proof of Reserves attestations, which verify client assets on a 1:1 basis. In the event of market volatility or failure to meet maintenance requirements, or if the loan reaches maturity without full repayment, collateral may be liquidated to cover the outstanding balance. Borrowers can repay early using their account balance, though an early repayment fee applies.

Additional costs include a one-time origination fee of 0.5%, paid in the borrowed asset currency, with interest accrued and charged every four hours throughout the loan's life.

The product is not universally available. FlexLine is currently restricted in several major jurisdictions, including Australia, Brazil, Canada, India, New Zealand, Switzerland, the United Arab Emirates, the United Kingdom, and the United States, reflecting ongoing regulatory considerations in the crypto lending space.

Kraken positions FlexLine as a straightforward alternative to both DeFi lending and more opaque traditional lending structures. As the company stated in its announcement, crypto holders have historically faced a difficult choice, such as, maintaining long-term positions or sellng assets for cash. FlexLine aims to eliminate that trade-off by offering a secure, on-platform solution with immediate access to funds.

The launch follows closely on the heels of another Kraken product expansion: the introduction of tokenized equity perpetual futures on its regulated derivatives platform, providing eligible non-US clients with 24/7 leveraged exposure to major US stock indexes, commodities like gold, and individual stocks such as Apple, Nvidia, and Tesla.

Competitor Coinbase has expanded its own collateralized loan offerings in recent months, enabling eligible US users to borrow up to $100,000 in USDC against a wider range of assets, including XRP, Dogecoin, Cardano, and Litecoin, again, without forcing sales of the underlying holdings.

Beyond exchanges, traditional institutions are increasingly integrating crypto into lending frameworks. US mortgage lender Rate recently introduced RateFi, a program that lets qualified borrowers leverage verified cryptocurrency holdings as part of underwriting requirements, treating digital assets as reserves or even income sources in some cases without liquidation.

Decentralized finance continues to dominate in scale, however. According to data from DeFiLlama, DeFi lending protocols currently hold approximately $51.9 billion in total value locked (TVL), with roughly $30.8 billion actively borrowed. Leading protocols include Aave, which commands nearly half the market with just under $26.9 billion in TVL, followed by Morpho at around $5.8 billion.

Institutional interest is also accelerating. On February 15, 2026, global asset manager Apollo Global Management with nearly $940 billion in assets under management, partnered with Morpho to bolster blockchain-based lending infrastructure, potentially acquiring up to 90 million MORPHO tokens as part of the collaboration.

Kraken's FlexLine thus enters a competitive yet expanding landscape, where demand for reliable, non-custodial-risk borrowing options continues to grow among both retail and institutional crypto participants. With the combinination of fixed rates, segregated custody, and seamless integration with its trading ecosystem, Kraken is betting that centralized, transparent lending can recapture market share from DeFi while appealing to users wary of smart contract vulnerabilities.

Information Sources:

• Kraken Blog
• Flexline Support
• Financefeeds
• Cointelegraph

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