NEW YORK, NEW YORK – MARCH 25: Traders work on the floor of the New York Stock Exchange during morning trading on March 25, 2026 in New York City.
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Arjun Sethi, the co-CEO of Kraken, told the Semafor World Economy Summit on April 14 that what retail crypto traders really want is what Citadel, Jane Street and JPMorgan already have. “That’s our mission,” he said. “How do we make all these products open?” Sethi used the appearance to confirm that Kraken’s confidential S-1 with the Securities and Exchange Commission is still active, first filed in November 2025 and paused this March when markets softened.
The product Kraken wants to sell retail is the same product its institutional desk already sells: tight spreads, fast settlement, credit lines. Two founders building the middleware that would make that product work at scale say the plumbing underneath is still a decade behind foreign exchange. “No matter what your views on Bitcoin or Ethereum, that new capital wants to enter this space,” BridgePort CEO Nirup Ramalingam told me on my podcast On The Margin. “So we have to build an infrastructure that’s needed for them.” Roughly $60 billion sits trapped in pre-funded accounts across crypto exchanges, according to BridgePort, because institutions do not trust the venues enough to leave assets there. And the off-chain attack surface that made Bybit, Resolv and Drift the year’s biggest breaches is getting wider, not narrower.
Institutional crypto’s next leg up is not a new ETF wrapper or a regulatory tailwind. It is plumbing. And Kraken’s pricing window will put the numbers in the open.
The $60 billion trap
Ramalingam spent two decades in foreign exchange and fixed income infrastructure before co-founding BridgePort. His pitch frames institutional crypto through a direct FX comparison. “In FX, seven trillion dollars is traded every single day between institutions. In crypto, that number is something like 100x less, somewhere between 50 and 70 billion,” he said, adding that spot crypto volumes were suppressed the week we recorded. (The Bank for International Settlements’ 2025 triennial survey, released in September, put daily global FX turnover closer to $9.6 trillion these days.)
The gap, in Ramalingam’s telling, is not about the asset class. It is about how trades settle. “Institutions with millions of dollars don’t want to deposit assets on every single exchange. When they’re not trading on any particular exchange, that’s debt capital. Debt capital is no ROI basically.” The pre-funding model dates to Mt. Gox. You wired dollars, Mt. Gox credited your account, you traded. Fifteen years later the model still survives, and the cost is that institutions park billions at venues they do not fully trust just to have execution optionality.
“This is what really enabled FTX collapse to happen,” Ramalingam said. “Traders could have been making money but unfortunately their money wasn’t secured and segregated. It was either inadvertently or nefariously taken up by the exchange.”
BridgePort’s answer is to sit as middleware between exchanges and custodians, letting trading firms pledge assets at a regulated custodian and draw a credit line on the exchange. Ramalingam described it in one line: “BridgePort is the Plaid for crypto.” Assets stay with the custodian. The exchange sees a balance it can lend against. When the trader wants to move capital, it reallocates in milliseconds rather than hours of on-chain withdrawals and deposits. The guardrail is that the pledged amount cannot be double-allocated across venues, something BridgePort enforces in software.
The institutional uptake is already visible in the plumbing itself. In March, 360T’s crypto trading platform 3DX integrated BridgePort as its off-exchange settlement layer. 360T is owned by Deutsche Börse, the German exchange operator with a market capitalization of roughly $50 billion. Anchorage Digital integrated BridgePort in December. BridgePort also plugged into the Lynq settlement network, whose other members include B2C2, Crypto.com, Galaxy Digital and FalconX. The middleware layer is being built in public by entities that do not generally enter businesses early.
Ramalingam is explicit about where that leads. “In fact, some in the US cannot pre-fund because of regulations,” he said of traditional asset managers. “So they have to hold their assets with the qualified custodian. Unless you put those qualifiers in place, how can crypto scale?”
The new custody risk
The other plumbing problem is not about capital. It is about keys. Ido Sofer spent seven years at the Israeli Ministry of Finance before founding Sodot, a key management infrastructure company whose name means “secrets” in Hebrew. His read of 2026’s biggest crypto losses is blunt. “Starting from Bybit and moving forward to a lot of others, including the recent ones like Resolv, Drift and others,” Sofer said. “Those are off-chain hacks that led to on-chain loss of funds. Developer credentials, deployment keys, API keys that are being stolen. And that provided access to moving funds on chain.” It is not the first time the industry has had to rebuild after a security shock.
What matters about that framing is that the smart contracts were not broken. The operational security around them was. Sofer calls the new state of play “custody 2.0”: it is no longer enough to secure private keys, because the attack surface has expanded to every credential a crypto firm uses to push code, connect to an exchange, or deploy a vault. “Attackers understood that before infrastructure teams and before security teams,” he said. “It’s upon us, the crypto companies, the infrastructure companies to close this operational security gap.”
Sofer’s recommendation for institutions is multiparty computation, the cryptographic technique that splits a key into shards held in different geographies, operating systems and sometimes different legal entities. None of the shards alone can move funds, and no single compromise, whether of an employee, a cloud provider or a country’s legal process, breaks the vault. Sodot sells a self-hosted version because institutions insist on running the software themselves. “This is how they do everything,” Sofer said, referring to how asset managers and regulated entities have always built internal infrastructure. The market, he added, has “changed itself for those institutions so they will feel comfortable.”
Sofer’s mental model for defending against nation state attackers is colder than the industry usually admits. “North Korea, they spend a significant amount of resources and they’re gonna be successful one way or another,” he said. “So what can you do? You apply risk distribution and add other layers of security on top of it, and then essentially you’re making it very hard, much harder than other companies in the space.” The gazelle does not have to outrun the lion. It has to outrun the slowest gazelle.
Where the two problems meet
Pre-funded balances and unhardened keys are the same problem wearing two masks. Neither pitch is radical. Off-exchange settlement is how every other asset class settles. MPC custody is how any banking institution with more than a billion dollars would design a new vault from scratch. Both are being rebuilt, in public, by founders who came from places where this was solved a generation ago: Ramalingam from FX and fixed income, Sofer from an Israeli government that treats cryptographic infrastructure as a strategic asset. Neither Kraken nor any other public-listing candidate will get through a diligence process without showing buyers how both have been solved.
The Kraken moment
The Kraken filing will be the market’s first extended look at what institutional crypto infrastructure actually generates in revenue. Sethi’s April round valued Kraken at $13.3 billion, roughly a third below the $20 billion the company commanded in late 2025. Deutsche Börse’s $200 million secondary purchase in that round is the same Deutsche Börse whose 360T subsidiary integrated BridgePort’s off-exchange settlement rail in March. The same parent is betting on Kraken’s equity and on the plumbing Kraken would need to scale its institutional business.
“What they want at the end of the day is what Citadel and Jane Street have, or JPMorgan has,” Sethi said at Semafor. Whether Kraken can deliver it depends on whether the middleware layer Ramalingam and Sofer are quietly building is ready for the dollars that come with an IPO.
“Another collapse like FTX cannot happen,” Ramalingam said of the institutions now circling crypto. Kraken’s S-1 will be the first time the public sees how much of the plumbing designed to make that promise true is already generating revenue, and how much is still being built.