Kraken Selected as Custody Partner for Ethena's USDe

Kraken Custody has been selected to manage the backing assets for Ethena's synthetic dollar, USDe. The partnership will ensure these assets are held in segregated, bankruptcy-remote cold storage through Kraken's state-chartered bank infrastructure. This decision was approved by the Ethena Risk Committee after a comprehensive review.

The collaboration between Kraken and Ethena aims to improve the transparency and security of USDe's reserves. Kraken Custody will support these goals by providing institutional-grade custodial services. The setup includes weekly Proof of Reserves and monthly attestations, starting this month.

Under the partnership, the underlying assets for USDe will be stored in isolated, cold-storage vaults on a one-for-one basis. This arrangement ensures the assets are shielded from the balance sheet risk of the custodian.

Why the Move Happened

For Ethena, custody is a critical risk decision. The selection of Kraken Custody was driven by the need to align with institutional expectations. The Ethena Risk Committee sought a custodian with a robust regulatory framework, operational controls, and strong security architecture.

Kraken Custody provides a regulatory framework suited for complex institutional workflows. The state-chartered bank infrastructure supports strict security needs and transparent asset management. Ethena's founder Guy Young emphasized the importance of this alignment with how the protocol defines the stewardship of USDe's backing assets.

How This Partnership Aligns With Market Trends

This partnership reflects a broader trend of decentralized protocols working with regulated financial institutions. The move bridges DeFi and TradFi by leveraging the strengths of both ecosystems. Kraken's security architecture includes hardware security modules and multi-party computation, supporting institutional-grade workflows.

Gurpreet Oberoi, Head of Kraken Institutional, noted that this engagement reflects Kraken's ability to support complex institutional workflows with robust security and compliance standards. This partnership underscores Kraken's role in supporting critical infrastructure for digital asset markets.

What This Means for Ethena and Investors

Starting in January 2026, Kraken Custody will participate in Ethena's ongoing transparency processes. This includes monthly custodian attestations and weekly Proof of Reserves reporting. These measures aim to provide the community with verifiable information on USDe's reserves.

Ethena aims to enhance the institutional reputation of USDe through this partnership. By using a reputable custodian, the network can minimize counterparty risks. This move demonstrates the importance of regulated custody services in the development of the digital asset industry.

This partnership is part of broader efforts to enhance the functionality and trustworthiness of USDe. It aligns with Ethena's focus on disciplined risk management and institutional-ready infrastructure. The collaboration with Kraken supports the long-term goals of scaling USDe in a secure and transparent manner.