Kraken is a full-featured crypto exchange with low fees and a good mix of coins. It is also one of the few US crypto exchanges that offer advanced trading tools like margin. It says the goal is to be “the best and safest.” To see if that’s true and to find out if it’s the best exchange and trading platform for you, read our full Kraken crypto exchange review.
This cryptocurrency exchange is well suited for: Experienced investors who want to make the most of margin trading and other advanced features.
Kraken crypto exchange Advantages
- Choice of cryptocurrencies
- Advanced trading features
- Reasonable Fees
Kraken crypto exchange Disadvantage
- Not for beginners
- Limited starter account
- Slow account funding
- Questionable customer service
- No tax incentives
Kraken is a reputable digital currency exchange that has been around for almost a decade. This is a solid option for which it is very much.
Founded in 2011 and launched in 2013, the Kraken crypto exchange is one of the largest and oldest exchange offices in the world. And it has had security in mind from day one. The fact that the Kraken has not been hacked for 8 years speaks for itself.
The US-based exchange has consistently led the industry when it comes to security. It offers both physical security and financial stability. Also, it pushes users into healthy security habits.
Selection of cryptocurrencies
Kraken has nearly 60 coins and trades seven fiat currencies. This isn’t the largest selection of digital currency you’ll find, but it’s on par with some of the top cryptocurrency exchanges. And it’s a step up from many brokers who only offer a handful of well-known coins. Kraken also has high liquidity, which means it’s easier to buy and sell at a fair price.
Kraken works with currency pairs and not all of its currencies are interchangeable with others. What is a currency pair? Imagine you are on holiday in Germany and need to exchange your dollars for euros. This is a currency pair. When using dollars to buy Bitcoin or buy Ethereum, you are always exchanging one currency for another.
Kraken crypto exchange Features
In addition to being one of the first digital currency exchange platforms, Kraken has a lot to offer investors at all levels. Here are the most important features:
Over the years, digital currencies have been particularly vulnerable to hacking, resulting in millions of dollars in lost coins. While most hacked exchanges have refunded their customers for any lost value, you don’t want to end up with a crypto exchange with poor cybersecurity that could leave your coins ripe for pickup.
Kraken takes its commitment to security seriously and ranks first on the CER Digital Currency Exchange Security Review site. Remarkably, Kraken has not had any major hacking events in its 10-year history, something even international industry leader Binance cannot claim.
Not only does Kraken offer secure coin storage, with 95% of deposits stored offline in cold stores around the world, but it also promises platform security: its servers are kept in secure cages and monitored 24/7 by armed guards and video monitors. In addition to physical security measures, Kraken encrypts all your sensitive contact information at the system and data level and regularly runs vulnerability tests of its system.
Although its instant buy platform, Kraken can make an expensive first foray into crypto, there are no barriers to entry if you’re just starting. For most user types (Kraken has four), you can get auto-verified in minutes. The highest tier, Pro, can take several days due to the need to manually review certain documents.
Once verified, you can fund your account with fiat currency like US dollars and start buying cryptocurrencies. Although most major crypto platforms allow this these days, not all do and instead require users to purchase cryptocurrency elsewhere to make purchases on their platform.
An important note: Kraken uses third-party companies to process these fiat money transfers, and each of these companies has different account funding minimums and fees, meaning you may owe a fee for transferring your money when you are.
Advanced investment options
More demanding investors will be pleased with several additional offerings from Kraken.
In addition to the coins available to anyone, the Kraken crypto exchange offers high net worth investors in the US access to margin trading, a risky form of investing that allows you to borrow money to secure your purchases, using your existing investments as collateral. Margin can give you exponentially larger profits, but it also leaves you open to margin calls, which can cause massive losses if prices unexpectedly drop. Margin trading is currently less common on platforms available in the US as the federal government works out how it will treat crypto.
Also, margin trading comes with some additional costs. Kraken crypto exchange customers can expect to pay opening margin costs and rollover margin costs. Opening fees are charged when you first open your position (aka credit from Kraken) and buy something. Kraken reopening costs vary from 0.01% to 0.02% depending on the base currency.
Meanwhile, maintaining your position will incur rollover margin fees, which began four hours after you open your position. They are then reapplied every four hours thereafter. These fees also range from 0.01% to 0.02% depending on the base currency.
In addition to margin trading, Kraken lets you wager select coins. This means that if Kraken uses these coins to verify transactions for proof-of-stake currencies, you agree to lock your cryptocurrency on the exchange to receive rewards. Kraken pays out coin staking rewards every two weeks that are proportional to the number of coins you stake.
Advanced trading features
Kraken is one of the few exchanges that offer margin, stop orders, and crypto short selling. There is also a so-called dark pool in which large-volume investors can trade anonymously. With Kraken, you can leverage a currency pair by up to 5x and allow eligible Pro clients access to up to $500,000 in the margin. Margin trading can be risky before you get too excited. You essentially borrow money to invest.
Let’s say you invest $100 in Ethereum. You decide to use this 5x margin. If Ethereum increases in value, multiply your profits by 5. But if Ethereum decreases in value, your losses will also be multiplied. Cryptocurrencies are already a risky investment and using margin increases that risk exponentially.
Kraken’s fees are on par with several exchanges. It’s not the cheapest out there, but its maker-taker fees are lower than, say, Coinbase. Trading fees vary from exchange to exchange and often depend on how much you trade each month. See how much it will cost you to deposit and withdraw money and what you pay for each transaction.
Kraken crypto exchange: What could be improved?
Nothing for beginners
Kraken crypto exchange has some good educational resources for investors new to cryptocurrency trading. These include individual currency guides and a series of explainer videos. However, with all its advanced features, the site is designed for more experienced traders. With so many coins and so many features, beginners will find it difficult to adapt.
Limited starter account
Kraken offers three account tiers, which we will discuss in more detail later: Starter, Intermediate, and Pro. The starter account — the only one you can get without showing photo ID and other documents — lets you do little.
This can be frustrating as a user. But it’s also part of what makes Kraken secure and allows it to offer these advanced features.
Slow account funding
You can deposit US dollars using FedWire, but only after providing your ID and verifying your account. If you live in the US, credit and debit cards cannot be used as a deposit method. And processing Fiat foreign currency deposits may take one to five business days.
However, to deposit coins, you only need a starter account and it takes about five minutes to deposit. Kraken has resources to help you transfer funds from other exchanges.
This crypto exchange offers 24/7 customer support and an easy-to-navigate help center. However, it only scores 1.9 out of 5 on Trustpilot. It’s always difficult to know for sure how trustworthy these reviews are, but you want to trust the people you spend your hard-earned money to. Several reviews complain that their money hasn’t arrived in their account and that the support desk hasn’t responded.
How Kraken crypto exchange works
Kraken crypto exchange is a pure crypto exchange. It does not attempt to offer savings accounts or loans. And it doesn’t even have an e-wallet.
It is a centralized exchange that you can access online. The mobile app is not yet available in the US. As we have already discussed, qualified users on Kraken can access margin, stop orders, and crypto short selling. You can also use it to wager coins to earn interest if you leave that currency in your account unchanged.
To set up a basic account, you will need to provide information such as your name, date of birth, and address. You must be over 18 and live in a supported territory (anywhere in the US except Washington and New York).
There are three verification levels:
Starter: With this basic account you can deposit, exchange and withdraw cryptocurrencies, but you cannot do much more. You can’t withdraw or deposit fiat currencies, so you’ll need to upgrade if you want to move dollars into crypto.
Intermediate: To upgrade to an Intermediate or Pro account, you must provide valid photo identification (such as a passport or driver’s license), proof of residence (such as a utility bill), and your Social Security Number or ITIN. After upgrading, you can deposit fiat and trade Kraken futures.
Professional: Pro level unlocks higher account limits and also gives access to the “dark” anonymous trading pool and OTC table. The desk facilitates large orders without causing price disruptions on the public exchange.
To fund your Kraken crypto exchange account you will need to make a wire transfer – see fee structure below. You cannot use your debit or credit card to buy cryptocurrency with Kraken in the US. Budget processing may take up to five days.
Like many exchanges, Kraken uses a Maker-Taker fee structure. There are discounts for those with large trading volumes.
Cryptocurrency deposit and withdrawal fees depend on the currency. For example, you would pay 0.00015 BTC to withdraw Bitcoin with a minimum of 0.00050 BTC.
Kraken has a strong mix of cryptocurrencies. There are nearly 60 coins on its list for US traders, including top coins like Bitcoin, Ethereum, and Cardano. It has three StableCoins and works with seven different Fiat currencies.
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Aave (AAVE)
- Algorand (ALGO)
- Aragon (ANT)
- Augur (REP)
- Augur v2 (REPV2)
- Basic Attention Token (BAT)
- Balancer (BAL)
- Cardano (ADA)
- Chainlink (LINK)
- Compound (COMP)
- Cosmos (ATOM)
- Curve (CRV)
- Dash (DASH)
- Decentraland (MANA)
- Dogecoin (XDG)
- Energy Web Token (EWT)
- EOS (EOS)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Filecoin (FIL)
- Flow (FLOW)
- Gnosis (GNO)
- ICON (ICX)
- Kava (KAVA)
- Keep Network (KEEP)
- Kusama (KSM)
- Kyber Network (KNC)
- Lisk (LSK)
- Litecoin (LTC)
- Melon (MLN)
- Monero (XMR)
- Nano (NANO)
- Ocean (OCEAN)
- OmiseGO (OMG)
- Orchid (OXT)
- PAX Gold (PAXG)
- Polkadot (DOT)
- Qtum (QTUM)
- Ripple (XRP)
- Siacoin (SC)
- Stellar Lumens (XLM)
- Storj (STORJ)
- Synthetix (SNX)
- tBTC (TBTC)
- Tezos (XTZ)
- The Graph (GRT)
- Tron (TRX)
- Uniswap (UNI)
- WAVES (WAVES)
- Yearn Finance (YFI)
- Zcash (ZEC)
Is your cryptocurrency safe with Kraken?
Safety is one of Kraken’s core principles. It has not been hacked since its launch in 2013 and is widely recognized as one of the safest cryptocurrency exchanges. However, cryptocurrency security is a hotly debated topic and any exchange can be vulnerable to hacks. Learn more about Kraken’s security approach here.
Coin Storage: Kraken says 95% of its crypto assets are kept in cold storage (essentially offline and protected from hacks). It also has full reserves and has conducted an external audit to demonstrate reserves.
Platform and information security: The physical servers are monitored 24/7. Sensitive information is encrypted at both the system and data levels.
Security Testing: Ongoing penetration testing protects Kraken’s systems, both through the internal team and through the bug bounty program. The bug bounty programs provide an incentive for ethical hackers to find and report bugs.
User Safety Features and Awareness: Kraken’s website states that “no amount of security on our side can compensate for insufficient personal security”. It features two-factor authentication, secure email, and security locks. Furthermore, it complements its security by teaching users how to protect their accounts.
Kraken is right for you if:
- You are an experienced trader who wants to use advanced features like margin.
- You are a crypto investor ready to step up with more coins and more features.
- And you value security over ease of use and want to put your money in the safest possible hands.
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