Bitcoin exchange Kraken (Payward, Inc.) has launched the Kraken dark pool, a new trading feature that allows Kraken clients to privately place Bitcoin orders and execute against similar-sized orders at potentially better prices than publicly exposed trades.

The dark pool, a term often used in broader financial markets, is an order book that is not visible to the rest of the market, and, in this case, the Bitcoin exchange market.

Privacy is the key, with individual traders only knowing their own orders.

Kraken’s dark pool allows users to anonymously place large buy or sell orders without revealing their interest to other traders, particularly when those large orders could cause the Bitcoin exchange rates to more based on the trade, potentially in an unfavorable way to the person attempting to make the trade.

While claimed to be a feature asked for by clients, the dark pool does have some financial benefits for Kraken as well, with the exchange charging an additional 0.1 percent for dark orders.

Regulatory issues

The potential problem with running a dark pool, as is the case in the broader financial market, is that the complete lack of transparency, and “secret trading” if you like, often leads to regulatory issues.

As SiliconANGLE’s Dr. Bitcoin said to me while discussing the story, it’s a surprising move by Kraken, given the company bent over backwards to get certified state-by-state.

“So for them to switch course and go with something that will attract the wrong element is surprising to me” he added.

While obviously advantageous to high-level traders, dark pools do often attract the wrong sorts of people because they are hidden trades, and it does potentially put Kraken’s licenses at risk if, or should a client attempt to manipulate the market.

If you’re interested in using the Kraken dead pool, the minimum threshold for making a dark pool order is 50 Bitcoins, at the time of writing roughly the equivalent to $11,500. The dark pool will accept orders for trading between Bitcoins and EUR, USD, JPY or GBP, and dark pool pairings are designated by a “.d” extension (e.g. XBT/EUR.d or XBT/USD.d).

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