Kraken is considered an instituion by many. It is one of the original cryptocurrency exchanges that has been around for over 6 years.
In response to criticism that they have fallen behind the times, the exchange beefed up their trading engine and added a wide selection of cryptocurrencies and fiat trading pairs.
Was this enough and is Kraken worth your while?
In this Kraken review we will give you everything you need to know. We will also take you through the trading process and highlight some essential do’s and dont’s when trading here.
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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.
Is Kraken Safe?
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.
To make sure that there are no possible attack vectors, Kraken does regular penetration testing. This is conducted by experienced cyber security and blockchain experts.
Finally, on the fiat deposit side, Kraken 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.
On the user account side, Kraken makes use of two factor authentication for account access. These are able to protect your account in the event that someone gets their hands on your password.
There is also the option to place what is called a global settings lock on your account. This will prevent any changes to your account over a set period of time and will hide the display of any sensitive information.
Account Lockdown Kraken
This really depends on how many layers of security you want as 2FA should usually be ok.
Of course, Kraken has all the standard SSL certificates that protect you from any man-in-the-middle and phishing attacks. You always have to make sure that you observe the green padlock and notification of the “secure” connection.
Cryptocurrency phishing or homograph attacks are quite common and making sure that you are visiting the actual Kraken website is your first line of defence.
Lastly, if you would like all of your email communications with Kraken to be PGP encrypted then they have the functionality for that as well. Assuming that your email inbox is PGP enabled, you can insert your PGP key in your “Account” settings at Kraken.
PGP Communication at Kraken
Once you have inserted your email PGP key, all of the emails that Kraken will be sending you will be encrypted with Pretty Good Privacy and will eliminate the chance of any email interceptions from hackers and the like.
With all these security procedures, Kraken seems to be quite a secure exchange. Of course, best practice will have you limiting the amount of coins that you will leave on the exchange at any one time.
Countries and Assets
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, USD 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. Below is a list of all the cryptocurrencies that you have the option of trading:
List of crypto assets at Kraken
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. Kraken has also crossed all of their altcoins with Bitcoin to create BTC markets.
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.
Taking a look at 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 fee model is used to incentivise market making. Basically those that create liquidity on Kraken’s order books get a lower fee than those that take liquidity away.
They also give traders a tiered fee schedule. This means that those who do more volume will get a lower fee. Below are the maker / taker fees for all their markets based on the level of trading volume.
|Rolling Volume USD||Maker Fee||Taker Fee|
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.
Funding / Withdrawal Fees
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
- EUR SEPA Deposit (EEA Countries) is free and a withdrawal is only €0.09
- EUR international wire transfer has a €5 deposit fee
- CAD domestic EFTs are Free but attract a 0.25% fee on withdrawals
- CanadaPost In-person cash/debit has a 1.25 CAD + 0.25% deposit fee
While there are no charges to deposit cryptocurrency on Kraken, the following withdrawal costs apply to the top 7 crypto pairs:
- Bitcoin: 0.0005 BTC
- Bitcoin Cash: 0.0001 BCH
- Ether: 0.005 ETH
- Litecoin: 0.001 LTC
- Ripple: 0.02 XRP
- Monero: 0.0001 XMR
- Steller: 0.00002 XLM
These fees are used to cover the network or miner fees that Kraken has to incur to propagate your transaction. It it interesting though that they have set these at a flat level instead of making it dynamic like most of the other exchanges.
Margin Trading Fees
If you are going to start making use of the Kraken margin trading facilities then you will get charged two seperate fees. You will get charged a trade fee or as they have termed it “opening fee”. This is essentially just a fee on the size of the position.
You will also be charged a “rollover” fee. This is the fee that you will be charged on the notional of the contract for keeping it open. You can think of this as anologous to an interest rate that is applied every 4 hours.
For Bitcoin and Tether margin trading, you will be charged a 0.01% opening fee and a 0.01% rollover fee per four hours. For Bitcoin Cash, Ethereum, Ethereum Classic, Augur, Monero and Ripple you will be charged a 0.02% opening fee and a 0.02% rollover fee every 4 hours.
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, name and phone number).
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.
There are three different account verification levels at Kraken. These are the Starter, the Intermediate and the Pro. Below are the crypto / fiat deposit and withdrawal limits for each:
Account tiers at Kraken with Limits
Below are the information and documents that Kraken will require for each level mentioned above.
- Starter: This is the first stage of verification at Kraken and requires you to login with 2FA, an email, your full name, DOB, phone number and a physical address.
- Intermediate: This tier requires you to complete everything from the Starter as well as include a Valid ID & Proof of residence. Depending on the document that you use for your ID verification you may have to take an ID confirmation photo. This is usually a picture of you holding the document in question.
- Pro: To get accepted on the Pro tier you have to complete all of the above as well as answer a KYC questionnaire. This could ask you questions on source of funds as well as your occupation etc.
Once you have submitted these documents to Kraken, you will have to wait for either an automatic or a manual verification.
If you have made an application for a starter account, verifications are done automatically. This can usually take no less than an hour.
The Intermediate and the Pro levels require manual verification at the Kraken team. According to their guidance, this could take anywhere from 1-5 days.
This is probably also where many people can 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.
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.
Kraken account registration
Once you have registered and are on the platform, they will ask you to secure your account with two factor authentication. You can either use the Google Authenticar App or a special “Yubikey” which is a hardware device that can generate a one time pin.
After you have set this up you can start the verification process. You can click on the “Get Verified” option link right there on your account. From here you can select the verification tier that you would like to go ahead with.
You will complete the verification requirements and submit the information that we have listed above. Once this is done you are ready to fund your account and start trading on Kraken.
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 with the Intermediate tier.
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.
EUR fiat funding options in Account Management
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. You can still do this on a Starter account with no deposit limits. Take note though that you will have a $5k daily withdrawal limit.
Kraken Trading Platform
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.
However, in mid 2018 the exchange released its completely new and improved matching engine and trading platform. They have also upgraded the trading interface as well as given the entire website a UI upgrade.
Kraken has two methods in which you can trade crypto. The first is through the use of the order forms that you have right there in your account. This is perhaps the easiest if you want to just perform a simple buy / sell.
Below is the interface for the order form when conducting a Simple buy / sell. These can either be a market order executed at the market price or a limit order.
“Simple” order option in Kraken order form
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 which we will go over below.
Once you have placed your order it will be presented below that in your order book.
This is Kraken’s answer to all the other cryptocurrency exchanges with advanced trading technology.
It was developed for those traders who needed more charting functionality and trading tools in order to conduct more rigorous technical analysis. Below is the main user interface:
The Pro Trading platform over at Kraken
On the top left you have the option to quickly switch between the different markets. Then, just below that you have the main charts and charting tools. Here you can map out your trend-lines, graph out specific technical studies as well as refine the chart parameters.
For example, you have over 20 technical studies included in the package such as the Chaikin Oscillator, the Parabolic SAR and numerous moving average charts. You can also draw fan lines, Fibonacci retracements and Fibonacci arcs.
In the middle of the interface you have your watch-list as well as your buy / sell walls. The latter are helpful to the trader as they allow him / her to get a better sense of the market sentiment (bullish or bearish).
Then, right next to that you have the exchange order books as well as the previous orders. Finally, on the far right there are the more advanced order forms that you can execute. Let’s take a closer look at these:
Both in your account area and in the advanced platform you have a number of order types.
Advanced order forms
While you are perhaps familiar with the simple order types, it helps to know what the other orders mean.
- Market Order: This is an order that is placed at the market level and will be executed immediately.
- Limit Order: This is set at a predetermined price and quantity that could be away from the current market level. It will remain open until either executed or it expires. For the expiry options you have Good-Till-Cancelled which will remain open until it is executed or cancelled. You can also choose a daily, weekly, monthly or even a custom expiry.
- Stop Loss: Simple limit order that will be executed once reached and limit the loss that you have on your account.
- Take Profit: The opposite of a stop loss. This will be executed once your profitable position has reached a certain price limit.
- Settle Position: This is an order that you will use if you want to settle an open margin traded position.
For those traders who have specific stop / take profit levels in mind then you can set a conditional close. These are orders that will open a order for closing a position at the same time as the order for opening it.
So, for example, assume you were about to go long BTC at a certain limit level. You would place this order and at the same time, you could place the stop loss that you would apply to this open order.
Something that Kraken provides that is not an option at the other large Fiat gateways is crypto 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 from 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
After Kraken successfully raised $100m, they went on an expansion drive and purchased the London based Crypto Facilities. This is a regulated futures platform where traders can trade crypto with leverage.
Kraken decided to re-brand the product as Kraken futures and have now included futures trading on their roster of instruments. Unlike Kraken’s standard margin trading, these instruments allow you to trade up to 50x leverage on certain cryptocurrency pairs.
Futures are different from traditional margin instruments in that they are based on the price of the asset at some future time. These future times are called the “expiry times” and they allow market participants to hedge market risk or take a future view on the price of the asset.
With the launch of this new service, they are giving their traders the opportunity to trade 6 different cryptocurrency assets including Bitcoin, Litecoin, Ripple, Bitcoin Cash and Ethereum. Below are the details of their futures contracts.
Futures contract terms at Kraken
As you can see, they offer three types of contracts. These are the Perpetual, Monthly and Quarterly. These are based on when the contracts will expire.
As is the case with the other futures exchanges, you also have a continually rolling futures contract that does not have a fixed expiry. Perpetual futures behave like most other margin or spread betting instruments and will be almost identical to the spot price (not the case with traditional futures).
You will be surprised to know that these instruments are fully regulated by the UK’s FCA. This places Kraken at a distinct advantage over other exchanges such as BitMEX et al that are not regulated by any financial authority.
If you would like to trade the Kraken futures and you are in a jurisdiction that allows it then you will need to move over to their dedicated futures platform.
Kraken Futures Platform
Their futures platform is well laid out and has a great deal more functionality that you will have on their standard platforms.
You can switch between the various currency pairs in the header and be take to those respective markets. On the left of the platform you can switch the expiry time as well as view all the contract specifics.
The User Interface of the Kraken Futures Platform
In the middle you have your order form and your previous orders below that. Finally, to the right of that you have the order books you have the market depth charts as well as all of the previous trades.
Just above the order books, you have the market charts. As is the case with the standard Kraken platform, the future platform uses the tradingview technology which allows for more in-depth analysis.
For those traders who double as developers, they can make use of the advanced Kraken API. For simple information such as pricing, volume and order books they can make use of the public API.
Alternatively, if the trader would like to develop a trading bot then you can access the Kraken API via private access which will allow you to execute trades. This is probably what most algorithmic traders will use if they are trading based on technical indicators.
In order to prevent abuse by traders, the Kraken API has particular rate limits that determine how many requests can be placed in a given period. This is based on what has termed “Call counters” and you can read more about the Kraken API call rate limits here.
Setting Up API
If you want to make use of the API to place trades instead of just pulling data then you will need to get a Kraken API key. These can be generated in your “Account” section on the Kraken website. You will select to generate an API key.
Generating Kraken API Key
Once you have done that, you will be required to complete your desired settings for your personal access to the Kraken API. These will be determined by the particular requirements of your trading algorithm. Once you have submitted the form Kraken will generate you an API key that you can use when sending requests to the Kraken API.
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.
Kraken Customer Support
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.
Something that we found quite helpful to supplement the customer support was the Kraken Status page. This is where traders can go to get a live update on the trading systems and website at Kraken.
This is not something that most other exchanges have offered and it seems as if Kraken has learned a lesson from the recent downtime debacle during December 2017 and January 2018.
The Kraken exchange status page will keep you informed if there are any serious system outages. They will also give you a comprehensive breakdown of the downtime reports for the past 24 hours. This is broken down to the API and website in terms of both the uptime and response time.
Kraken Exchange Status Updates
You can also navigate to the incident history page. Here they will give you an update of all the announcements from scheduled maintenance to unexpected outages. At time of writing the only issues that were being reported were connectivity issues for the site and API in May.
If you would like to get regular Kraken updates on all issues then you can subscribe for these. You can either get them through email, SMS, webhook or online chat. This could be helpful for those traders who use the API and require regular updates.
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.
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 Kraken
- Long Track Record
- Numerous Fiat / Crypto Pairs
- Strong Security
- Extensive Geographic Coverage
- Futures Trading
- Numerous Platform Issues
- Slow Customer Support
- Closure of Yen Funding Option