Kraken Institutional is partnering with Bitwise Asset Management to launch its first managed investment strategy, expanding into a full-fledged cryptocurrency investment platform beyond trading and custody services, The Block reported on Feb. 5 local time.

The newly introduced Bitwise Custom Yield Strategy is a professionally managed strategy for institutional investors. Bitwise will handle portfolio management, while Kraken will be responsible for custody, execution and risk management.

Starting with this, Kraken Institutional plans to offer multiple managed cryptocurrency strategies on a single platform so institutional investors can access various strategies without complex coordination.

A Kraken spokesperson said the strategy generates yield using covered call options based on Bitcoin. It is structured to earn income by selling call options against held Bitcoin, and includes a buffer function that offsets some losses when prices fall. Returns may be capped in a sharp bull market.

Kraken said many institutional investors currently hold cryptocurrency assets that generate little or no yield, and that accessing yield strategies requires coordination with multiple service providers.

Kraken said it expects the Bitwise Custom Yield Strategy to address these issues by enabling external managers to run strategies within Kraken custody.