Kraken’s Move Into Prop Firm Trading

Kraken Steps Into Prop Trading

In September 2025, the cryptocurrency exchange Kraken announced that it had acquired Breakout, a Tampa-based startup specialising in evaluation-based funding for traders.

Breakout offers access to funded accounts of up to US $200,000, with profit splits that can exceed 80%, and it supports more than 50 crypto pairs in both spot and derivatives markets. This strategic move brings proprietary trading, often referred to as “prop trading”, into Kraken’s platform and signals a shift toward providing experienced traders with institutional-grade tools and capital.

The acquisition fits with Kraken’s broader goal of integrating different trading services, allowing users to manage spot, futures and prop firm accounts through a single interface.

Understanding Prop Firms

A prop trading firms deploy their own capital instead of clients’ funds. Prop desks exist within brokerage houses, hedge funds and independent firms, giving qualified traders access to substantial buying power and advanced infrastructure.

The firm profits when its traders profit and absorbs losses within predefined limits. Because the money at risk belongs to the firm, traders must follow strict risk parameters such as daily loss limits, maximum drawdowns and restrictions on certain strategies.

Those who violate these rules are removed from the program, underscoring the importance of discipline and consistency. Prop trading is, therefore, a structured environment designed to reward proven trading skill rather than speculative risk-taking.

Comparing Prop and Retail Trading

While both prop and retail trading involve speculation on financial instruments, they differ fundamentally. In retail trading, individuals open a brokerage account, deposit personal funds and keep all profits, but they also bear all losses. Prop traders use firm capital and must pass a test or evaluation to prove their strategies and risk management.

Retail traders enjoy complete autonomy but must self-fund, whereas prop traders exchange some of that independence for larger capital allocation, mentorship and access to institutional tools.

Prop accounts typically require splitting profits with the firm, normally 80% for the trader and 20% for the firm, but they carry 100% risk of losses. The choice between the two approaches depends on a trader’s risk tolerance, capital resources and appetite for oversight.

Funding and Profit Sharing

Prop firms generate revenue through evaluation fees and a portion of trading profits. Applicants pay a one-time fee to participate in a simulated trading test that mirrors live conditions.

Passing the evaluation grants access to a funded account that often matches or exceeds the size of the test.

Breakout allows traders to keep up to 90 % of their profits once they pass its assessment, and accounts can reach $200,000.

The platform offers leverage of up to five times on Bitcoin and Ether contracts, which magnifies both gains and losses. Capital allocation is therefore paired with strict risk parameters: trailing drawdowns and daily loss limits ensure the firm’s capital is protected while enabling traders to scale their strategies.

Evaluation Phases and Risk Rules

Evaluation processes differ across prop firms but typically involve one-step or multi-step challenges. Breakout offers a single-step evaluation with a profit target of around ten per cent and a maximum drawdown of about six per cent; a two-step option splits the target into two stages, allowing a slightly larger to 8% overall drawdown.

There is no fixed time limit, enabling traders to trade at their own pace. Once funded, accounts can be scaled from $5 000 to $100 000 and eventually to $2 million for those who maintain consistent performance.

Prohibited strategies include high-frequency arbitrage and exploiting latency, while permissible approaches may include discretionary or algorithmic trading. The aim is to test discipline and adherence to risk management under live market conditions.

Motivations Behind the Acquisition

Kraken’s purchase of Breakout is part of its wider expansion into derivatives and advanced trading services. Earlier in 2025, Kraken acquired NinjaTrader, a futures broker and trading software provider, indicating a desire to build a comprehensive trading ecosystem. Breakout’s evaluation model aligns with Kraken’s vision of allocating capital based on traders’ skill rather than personal wealth.

Financial details of the transaction were not disclosed, but the deal follows Breakout’s US$4.5 million seed round in 2024 and underscores Kraken’s commitment to innovation in the crypto market. The integration promises to give traders direct access to funded accounts alongside spot and perpetual trading, all within the Kraken Pro interface.

Additional Distinctions and Opportunities

Beyond capital and risk parameters, there are practical differences between prop and retail trading that can influence a trader’s choice. Prop firms often negotiate lower commission rates than retail traders can obtain on their own.

They may provide training, mentorship and a collaborative office environment, all designed to improve performance. In contrast, retail traders operate independently and must source their own education, tools and market data.

Prop firms also tend to supply better technology and analytics, although fees for data feeds may still apply. These structural perks can make prop trading attractive to professionals seeking to refine their craft within a supportive framework.

Looking Ahead to a New Trading Landscape

As prop trading grows in popularity, the broader trading ecosystem is shifting. The rise of prop shops reflects a move toward larger capital allocations, shared incentives and community support.

Prop firms align their success with that of their traders by sharing profits, providing training and fostering a network of peers. Retail brokers remain useful for traders who prefer independence and have sufficient capital, but many professionals are opting for prop firm models because they reduce personal risk and provide institutional-grade infrastructure.

With Kraken now offering funded accounts through Breakout, the line between exchange, broker and prop firm is blurring. The future may see more exchanges adopting evaluation-based funding, giving disciplined traders new pathways to scale their strategies under well-defined risk parameters.

Conclusion

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