Kraken Institutional is turning to blockchain data firm Upshot to help price illiquid crypto assets, moving to strengthen valuation and risk controls for clients amid growing institutional attention on transparent price discovery for thinly traded markets.
Addressing illiquidity and price discovery
Illiquid crypto assets — including long-tail tokens and other thinly traded instruments — often lack reliable reference prices. Sparse order books, fragmented liquidity across venues, and inconsistent trade reporting can make it difficult for market participants to mark portfolios, assess collateral, or meet audit and compliance requirements.
By incorporating specialized pricing for illiquid assets, Kraken Institutional aims to provide more consistent marks that reflect current market conditions even when trade data is limited. Improved price discovery can support portfolio valuation, counterparty risk management, and operational processes for asset managers, funds, lenders, and other professional market participants.
What Upshot provides
Upshot develops data and pricing models that estimate fair value for crypto assets with limited trading activity. Its approach draws on on-chain signals and other market inputs to generate timely pricing estimates that can be integrated into trading, risk, and reporting workflows. While highly liquid assets typically rely on exchange quotes, specialized models can help fill gaps where conventional price feeds are unreliable or unavailable.
Why it matters for institutions
- Valuation: More consistent marks for hard-to-price assets improve net asset value (NAV) calculations and investor reporting.
- Risk and collateral: Robust pricing supports margining, lending, and counterparty risk frameworks that depend on dependable reference values.
- Audit and compliance: Transparent methodologies can help institutions demonstrate fair value practices and strengthen internal controls.
- Operational efficiency: Streamlined pricing inputs reduce manual interventions and reconciliation across systems.
Market context
The move aligns with a broader industry push to bring institutional-grade infrastructure to digital assets, particularly in areas where liquidity is thin and market data is noisy. As participation expands beyond highly liquid majors into a wider universe of tokens and on-chain assets, demand for independent and defensible pricing has increased.
Terms of the arrangement were not disclosed. However, the focus on illiquid asset pricing underscores a core challenge for crypto markets: establishing credible, consistent valuations that can scale with institutional adoption while accommodating the unique characteristics of on-chain markets.