In a landmark move, Kraken has acquired Breakout, a proprietary trading firm, marking its official entry into the rapidly expanding crypto prop trading sector as of September 2025. This acquisition is significant as it represents the first instance of a major cryptocurrency exchange venturing directly into proprietary trading, combining Kraken”s robust institutional infrastructure with Breakout”s innovative evaluation-based funding model.
The prop trading market has experienced extraordinary growth, with its valuation reaching $5.8 billion in 2024 and projected to grow to $14.5 billion by 2033. A surge in global interest is evident, as the search volume for “prop trading” increased by over 5,000% from 2020 to 2025. This trend is particularly pronounced in the cryptocurrency space, where interest continues to escalate.
Arjun Sethi, co-CEO of Kraken, emphasized the transformative nature of this acquisition, stating that “Breakout gives us a way to allocate capital based on proof of skill rather than access to capital itself.” This shift highlights a move away from traditional financial models that prioritize access to capital, towards a performance-based evaluation system for traders.
Kraken”s acquisition of Breakout is a part of a broader strategic initiative that includes earlier acquisitions of NinjaTrader and Capitalise.ai. This strategy positions Kraken as a formidable player in the professional trading infrastructure market. By incorporating Breakout”s funding model into its existing Kraken Pro platform, the exchange aims to offer traders both evaluation opportunities and profit-sharing arrangements.
Since its launch in 2023, Breakout has already provided over 20,000 funded accounts, giving Kraken immediate access to a substantial customer base. The integration of Breakout”s funding model with Kraken”s resources is expected to not only enhance funding availability but also to develop skilled traders who can drive the firm”s future growth.
The entry of Kraken into the prop trading arena is set to disrupt the competitive landscape significantly. Established firms like FTMO, a sector leader since 2015, now face competition from exchanges equipped with substantial capital and infrastructure. In response, FTMO has expanded its crypto offerings and improved trading spreads, adding more than 30 crypto CFD instruments by mid-2025.
Moreover, the emergence of platforms like Fondeo.xyz brings added dimensions to trader development in the prop trading ecosystem. These crypto-native firms are focusing on enhancing trader skills alongside funding initiatives. For instance, Fondeo.xyz is integrating AI coaching into its platform to tackle the psychological and technical challenges that often lead to trader failures. This approach aims to significantly reduce the high failure rates typical in prop trading, where over 90% of traders do not succeed in their initial evaluations.
As the prop trading sector continues to evolve, the integration of AI technology is becoming a critical component in addressing the psychological and technical barriers traders encounter. Many traders fail evaluations not due to lack of funds but because they struggle with risk management, discipline, and strategy formulation. The future of prop trading appears to be leaning towards a more comprehensive approach, combining capital access with advanced tools designed to enhance traders” skills and resilience.
