Kraken exchange has been around for quite some time. Launched in 2013, this could be considered one of the original cryptocurrency exchanges.
However, they have recently fallen considerably behind newer and more advanced cryptocurrency exchanges. So the important question remains, is Kraken worth your while?
We will answer this question definitively in an extensive review of the Exchange. This will cover a number of factors including the platform technology, customer support, asset coverage, fees and online reputation.
Most importantly, we will take you through the trading process and highlight some dos and don’ts on the exchange. In order to help form our opinion we have also reached out to a number of previous Kraken traders for their input.
With that being said, let’s kick off with a brief overview.
Kraken was founded in July of 2011 by the current CEO, Jesse Powell, in San Francisco USA. However, it was not until September of 2013 that the exchange officially opened their order books to the public. In the early days of Bitcoin trading it managed to pick up a number of accolades.
For example, in 2014, it became the top exchange in Euro volume for Bitcoin. Such was the trust in the Kraken price feeds and market data that Bloomberg decided to pull these numbers for the pricing on their terminals. They also have other things under their belt like completing the first cryptographically secure audit.
Kraken also was chosen in relation to another high profile cryptocurrency debacle of the Mt. Gox hack. They were chosen by the trustee of the exchange to be the partner that would pay out the creditors who fell victim to the exchange.
Of course, when one mentions exchange hacks, the most important question you may have on Kraken is on their security.
How Safe is Kraken?
Something that Kraken can no doubt be proud about is the fact that they have, to this day, still not suffered any sort of an exchange hack. While other early exchanges such as Mt Gox, Bitstamp, Poloniex and Bitstamp have all been hacked, Kraken managed to avoid any breaches.
This is no small feat indeed. So why has Kraken managed to stave off any sort of attack?
For one, they rely on some of the most rigorous procedures in cold storage wallets that are well “air-gapped”. This basically means that they keep most of their funds in a wallet that is not connected to the internet and is stored in a secure location. It was this lack of wallet best practices that allowed Mt. Gox to be so badly hacked.
In terms of their system security, they make use of locked servers in locked racks in data centres that have armed guards. All of the data on the system is encrypted and updated on a daily basis. They also separate their internal network from the uploaded client data. This means that staff members can only access your account for verification purposes and nothing else.
Kraken also wants to protect against any possible liquidity shortfalls in Fiat currency. Hence, they keep extensive reserves in their bank accounts for any scenarios where potential “bank runs” could occur.
Lastly, on the user side, Kraken makes use of two factor authentication for account access. They also use cryptographically secure communications and are able to secure your account with one lock in the case of a possible breach.
Country and Asset Coverage
Kraken is one of the so called “Fiat Gateways”. This means that many people will use the exchange in order to buy and sell Bitcoin for a Fiat currency. With that being said, Kraken currently offers trading to a number of different countries with different Fiat currencies.
They are available to residents in Europe, Canada and the US. They also allow Fiat deposits in Euros, British Pounds, US and Canadian Dollars. They used to accept Japanese Yen payments but had to shut this down recently given banking regulations.
What really impressed us about Kraken was the range of crypto pairs that they had in comparison to some of the larger fiat exchanges. To the right is a list of the cryptocurrencies that they offer.
This is far more extensive than other competitors such as Coinbase, Bitstamp and the like. In terms of the particular Fiat crosses, they have over 47 market pairs. As a small note before you begin trading, Kraken assigns the Bitcoin ticker as “XBT” instead of the more well-known “BTC” ticker on other exchanges.
Funding and Withdrawals
As we mentioned, Kraken is Fiat gateway that means you can deposit and withdraw in a range of different Fiat currencies. They accept wires into their bank accounts in CAD, EUR, GBP and USD. If your bank is in the European Union, a SEPA payment can also be made.
It is important to note, that like many of their competitors, they require some KYC procedures to be completed before you can fund your account in a Fiat currency. In Kraken’s terms, you would require a minimum of Tier 2 verification (more on this below).
If you are verified, then you are entitled to withdraw your funds to the same bank account that you sent them from. Withdrawal times can vary depending on where your bank is located. If you are in the EU, SEPA payments clear in a day or two.
International Swift wires will usually take between 3-5 business days before they will hit your account. This can sometimes be frustrating but that is the price one pays for using legacy banking systems.
Of course, you could also fund your account in cryptocurrency should you so desire. In order to withdraw below a certain limit you would only require to be verified to level 1.
Fees directly impact on your profitability as a trader. Hence, this is no doubt one of the more important points when looking at an exchange like Kraken. In terms of the fees that are charged for funding and withdrawing from your account, the following will apply:
- USD Wire Deposit and Withdrawal have a charge of $5 for banks in US
- USD Wire Deposit for banks outside attract a $10 deposit charge and a $60 withdrawal
- EUR SEPA Deposit (EEA Countries) is free and a withdrawal is only €0.09
- Outside EUR Deposit has a €10 deposit charge
- CAD Wire Deposits are Free but attract a $10 CAD fee on withdrawals
While there are no charges to deposit cryptocurrency on Kraken, the following withdrawal costs apply to the top 7 crypto pairs:
- Bitcoin: 0.001 BTC
- Bitcoin Cash: 0.001 BTC
- Ether: 0.005 ETH
- Litecoin: 0.02 LTC
- Ripple: 0.02 XRP
- Monero: 0.05 XMR
- Steller: 0.00002 XLM
In terms of trading fees, Kraken charges based on amount of trading volume that you are completing as well as whether you are a “maker” or a “taker”. This basically means whether you are selling or buying the pair. They differ for each currency pair and fiat cross and are quite extensive.
For example, to the right is the fee schedules for the Bitcoin and Bitcoin Cash EUR crosses as well as the Bitcoin and Ethereum cross. As you can see, the maker and taker fees go down in sliding scale.
These are the fees that are charged for each trade that you implement. The rolling volume is calculated by taking a look back at the last 30 days of trading volume on your account.
While these trading fees are largely in line with most exchanges, it is quite surprising for us to see a segmentation of the fees between the maker and taker side of the trades.
Account Tiers & KYC
As we mentioned, Kraken operates on a tier based structure when it comes to account limits for funding and withdrawals. Unfortunately, even for the most basic account types, you will need to supply some form of information (in this case date of birth and name).
If privacy is a concern of yours then there are other anonymous trading exchanges that you can make use of. These include OTC trading as well as decentralised exchanges and ATMs.
Below are the list of tiers and their individual requirements / limits:
- Tier 0:First stage tier that only requires an email address. Here you can look around the platform but no funding or withdrawals are allowed in any form
- Tier 1:This tier requires a name, date of birth, country of residence and phone number. Once you have this level of verification you have an unlimited crypto deposit limit but have a $2,500 daily withdrawal limit or a $20,000 monthly withdrawal limit.
- Tier 2:If you hand over an address, then you have access to tier 2 trading. This will allow you to deposit and withdraw fiat with a $2,000 daily limit. Your daily crypto limit is raised to $5,000.
- Tier 3:This is probably the highest level that most cryptocurrency traders will use. This enables someone to deposit and withdraw Fiat at a level of $25,000 per day. The daily limit on crypto withdrawals is now set at $50,000. In order to get this tier you have to submit a verified proof of residence, a government issued ID card and a Social Security number if you are based in the US.
- Tier 4:This is the highest tier of trading at Kraken that is reserved for high net worth traders as well as corporate or institutional accounts. Limits on both crypto and Fiat are raised to $100,000 per day. If this is a tier that would interest you then you can apply via a support ticket.
This is probably where many people may end up and become incredibly frustrated. As verifications have to be completed manually, they require someone at Kraken to read over them and confirm that they are legitimate.
During times of peak demand in the summer of last year, it was not unheard of for verifications to take in excess of two weeks for tier 2. One can get a sense of the community frustration in this reddit post from last year.
There are other examples of verification during the December rally to level three taking in excess of 3 weeks. Of course, one has to take into account that these were in times of extreme demand at the exchanges so it is likely that this has now come down slightly.
Kraken Registration & Trading
Moving onto the engine of the beast, we now take a look at the Kraken exchange platform. When you first visit the website you will have to complete a standard registration. This is the standard email and password combination in the image to the right.
Once you have registered and are on the platform you can now look to getting verified on either the basic (level 2) or advanced (level 3) verification tiers. You will just click on the “get verified”. It will then request the documents that we mentioned above.
At this stage you can also insert the details of the bank that you will be using for the funding of the account. What is important to note is that this is the bank that the funds will be sent back from and that Kraken will not accept banks in the names of third parties.
Once your account has become verified, you can make a deposit of your funds by selecting the “funding” section on the menu. If you pay in cryptocurrency like Bitcoin the transaction should take 30 minutes or so. If you are funding via Fiat then it will process at standard bank rates.
Once your account is funded, you are ready to crack on with the trading.
This is probably one of the places that Kraken has suffered negative press in the past. People have been highly critical of the platform as it was riddled with errors and constantly crashed. There would also be bugs that would not capture a trade order when placed.
Earlier this year, Kraken attempted to correct these problems by taking the exchange offline. This, unfortunately, had the effect of enraging some traders who could not have access to their coins and trades. The outage was not pre-announced and ended up taking over 2 days.
Nevertheless, Kraken managed to complete their “fixes” to their platform and rolled out their updated trading engine. Currently, is seems as if they were able to address many of the concerns that people had about the functionality. The new trading interface is in Beta and looks pretty impressive.
When placing an order at Kraken, you have a number of options. The easiest way is to make use of the “simple” order form where you can input your order with basic parameters (buy / sell & whether market or limit). This is in the image below:
For those who would like a bit more control over their order types, they can choose the intermediate or advanced order form. This will enable the trader to insert a number more parameters including when the order will start / close and what currency fees you would like to get charged in. You can also select the amount of leverage you would like to trade with (more on this).
The Beta version of the Kraken trading interface is another place in which you can place your orders. This has the benefit of having the live charts as well as the order books and market depth. You can place your order in the top right and see it getting worked into the books.
The charting package on the beta version of the new platform is also quite a spectacle. It seems to have most of the required studies as well as graphing functionality. For those traders who are really into their technical analysis, the kraken charting package is likely to satisfy their quench for analysis.
You can also adjust the span of the market depth, the range of the order books and place particular crypto paris on the watchlist. Altogether, it seems as though Kraken took a great deal of their trader’s feedback into consideration when designing this platform.
Something that Kraken provides that is not an option at the other large Fiat gateways is margin trading. You can trade on margin with leverage up to 5 times. While this is nowhere near the kind of leverage that one can expect on an exchange like Bitmex or a broker like IQ Option, it still provides traders with a nice edge.
The margin requirements on these trades will vary according to your verification limits and the currency that you are using to deposit the initial margin. You can read more about the required margin for the different pairs here.
For those traders eager to trade their favourite altcoins on margin, you may be slightly disappointed. There are only a handful of crypto / fiat pairs that you can margin trade on. These are presented below.
- XBT/EUR, XBT/USD
- ETH/XBT, ETH/USD, ETH/EUR
- ETC/XBT, ETC/ETH, ETC/USD, ETC/EUR
- REP/XBT, REP/ETH, REP/EUR
- XMR/XBT, XMR/USD, XMR/EUR
Kraken Dark Pool
Another interesting featured that Kraken has is dark pool cryptocurrency trading. This is basically when a trader is able to place trades that are not visible to the rest of the market in public order books.
This was launched by Kraken in 2015 and will allow traders to place their orders in an anonymous fashion. When they place these orders, they are not revealing their intention to the other traders. Kraken will try and match these orders with other traders on the opposing side of the trade.
Why use a dark pool?
When a order is large and is placed on the books, it could impact the price in the open market. People could see the order in the buy / sell walls and this could create either panic buying or selling. This will mean that the order will not get executed and the trader will lose a good price.
Kraken’s dark pool will no doubt be a favourable option for cryptocurrency whales and large institutional investors.
Customer support at Kraken seems to be about level with the industry standards. Apart from the delays that many people were experiencing in the verification stage, they seem willing to respond to support tickets in a relatively efficient manner.
There are of course a number of examples online of people who are less than impressed with their support times. While this is indeed troubling, we do not know the circumstances of these cases. Many times, when support tickets take longer than usual, it comes down to individual cases.
If you want to get hold of them, then you can use the chat option right from the dashboard which will give you the option to live chat to support. This is live 24/7 for those traders in different time zones.
Unfortunately, unlike competing exchanges such as Coinbase and Bitstamp, there is no phone support at Kraken. You can always get in touch with them through social media though and they seem to be relatively responsive on their twitter feeds.
Our review of Kraken has been relatively easy to conduct. The exchange is extremely transparent and document all of their procedures and policies online. They have also received extensive coverage in the past and have many mixed opinions.
On the positive side, Kraken seems to be highly secure with the most advanced procedures in place to ward off any potential hackers. They are also a great fiat gateway with extensive funding options that traders around the world can make use of.
For a large Fiat gateway, they seem to have quite a large range of cryptocurrency pairs that they offer. Moreover, it is an added bonus for some traders to know that they can enter positions with moderate leverage that allows them to make the most of small term moves.
On the downside, it is still hard for Kraken to shake the previous controversy that they had with the site downtime. Moreover, the verification times are still quite long as compared to some of the other exchanges. There are still some traders who appear frustrated with a raft of slow response times and exchange errors.
However, as we have shown, Kraken is generally quite responsive when it comes to complaints and suggestions. On previous occasions their CEO has responded to these concerns and promised an improvement.
What we can see is that with the site upgrade and the Beta release of the new platform, Kraken has gained some redemption. One can understand the strain they were undergoing at the time of market euphoria in Dec 17 – Jan 18.
So, is the Kraken the crypto exchange for you?
This depends to a great degree on your trading preferences and country of residence. However, from what we can see it is definitely a good option for a range of traders in search of a comprehensive Fiat gateway.
Featured Image via Fotolia
- Long Track Record
- Numerous Fiat / Crypto Pairs
- Strong Security
- Extensive Geographic Coverage
- Margin Trading
- Numerous Platform Issues
- Slow Customer Support
- Closure of Yen Funding Option