Hello hasmat, thank you for writing in. I've tested the Kraken app on my Android device and have been able to recreate the same behaviour.
The Android system prompt usually appears when setting up passkeys with hardware keys such as Yubikeys or digital security keys; not passkeys. This seems to be an issue with how the developers of the Kraken app have implemented passkey support.
I apologize for the inconvenience. I'll pass this information along to our developers.
Let me know if there's anything else I can assist you with.
-Evon
ref: dev/core/core#30965