Kraken Launches Bitcoin Staking with Babylon Protocol

Kraken, a prominent global crypto exchange, has introduced a new feature enabling users to earn rewards on their Bitcoin (BTC) holdings. This innovation is facilitated through a collaboration with Babylon, a novel staking protocol.

For the first time, Kraken users can stake their Bitcoin without the need for wrapping or lending, thereby securing Proof-of-Stake (PoS) networks while retaining full ownership of their BTC. This development marks a significant advancement in the crypto staking landscape, as it allows users to participate in staking activities without compromising the security and control of their assets.

Through this new feature, Kraken users can delegate their BTC to Babylon, which employs a unique time-lock method to bolster the security of PoS blockchains. Users receive weekly rewards in Babylon’s token, BABY. Notably, the users’ Bitcoin remains on the network and is never transferred or lent out, ensuring that the staking process is both secure and transparent.

Users can initiate staking immediately, but if they choose to unstake, there is a seven-day waiting period before the BTC becomes fully accessible. During this period, no rewards will be accrued. This waiting period is designed to maintain the stability and security of the staking process, preventing sudden withdrawals that could disrupt the network.

The staking feature is currently available to users in the U.S., excluding California, Maine, Maryland, New Jersey, New York, Washington, and Wisconsin. It is also unavailable in the U.K., Australia, and the United Arab Emirates. This geographical limitation is likely due to regulatory constraints and compliance requirements in these regions.

Unlike other platforms that offer Bitcoin interest through lending programs, Kraken’s method leverages Babylon’s unique time-lock system. Bitcoin holders do not need to entrust their coins to third parties or use wrapped tokens. Instead, users lock their Bitcoin using Bitcoin’s native Taproot scripts. Babylon then utilizes this locked coin as a security layer to protect PoS chains such as Ethereum (ETH), Solana, Avalanche, and Sui.

Kraken’s leadership views this development as a significant milestone. Kraken co-CEO Arjun Sethi highlighted that Bitcoin staking has traditionally been considered impossible due to the Bitcoin network’s lack of support for smart contracts or native staking features. However, Babylon’s approach has successfully bridged this gap, opening up new possibilities for Bitcoin holders.

Despite the innovative nature of the staking process, it is not entirely risk-free. Users may encounter risks such as fluctuating reward token values, unstaking delays, and reliance on centralized platforms like Kraken. These risks underscore the importance of thorough due diligence and risk management for users participating in the staking program.

Additionally, the rewards are paid in external tokens like BABY, rather than Bitcoin. This approach, however, avoids many of the issues associated with traditional earn programs, which often rely on lending and carry more counterparty risk. By using external tokens, Kraken and Babylon have created a more secure and transparent staking ecosystem.

Kraken has been actively expanding its offerings in 2025. The exchange recently launched its own Ethereum Layer 2 network called Ink and introduced a prime brokerage service for institutional investors. Additionally, Kraken has plans to initiate tokenized stock trading in the near future.

In March, Kraken acquired the trading platform NinjaTrader for $1.5 billion, marking the largest merger between traditional and crypto finance. This acquisition is part of Kraken’s broader strategy to integrate traditional financial services with the crypto ecosystem, providing users with a comprehensive suite of financial tools and services.