Key Takeaways
- Kraken is a prominent cryptocurrency exchange known for its longevity, security, and wide range of features.
- Kraken has been operating since 2011, making it one of the oldest cryptocurrency exchanges in the United States.
- Kraken operates in multiple jurisdictions, allowing users from various regions to access its services. However, specific offerings may vary depending on local regulations.
Kraken is a major US-based cryptocurrency platform with low fees, lucrative fiat/crypto trading pairs, and advanced trading options. Independent media outlets consistently rank it as one of the best cryptocurrency exchange platforms today!
Read this review to learn everything you need to know about trading safely on the Kraken exchange platform.
What Is Kraken?
Kraken is a US-based exchange founded in 2011 by Jesse Powell. It officially launched trading operations in 2013 and is now among the best exchanges in the United States.
Known for its user-friendly interface and advanced trading features, the platform offers a wide range of cryptocurrencies to trade, including Bitcoin, Ethereum, and numerous other digital assets. The exchange also provides various trading tools and services, such as margin trading, futures contracts, and staking.
Kraken’s commitment to security has been a key contributor to its success and employs strong measures to protect user funds and data, including cold storage wallets and two-factor authentication. Additionally, Kraken has a strong track record of compliance with regulatory standards, which instills confidence in its users.
Kraken Features
Kraken caters to various trading needs. Here are some of the exchange’s key features:
Trading
Kraken offers trading pairs in USD, EUR, GBP, CAD, and JPY, as well as more than 300+ cryptocurrencies listed on its platform. Advanced margin trading options are incredibly lucrative for professionals.
Kraken Pro
Kraken Pro is a professional trading platform offered by Kraken that is designed for advanced traders who require more sophisticated tools and features than the standard Kraken interface.
One of Kraken Pro’s key features is its customizable interface. Traders can arrange their trading screens to suit their preferences and workflow, allowing for efficient navigation and access to essential information. This customization includes adding or removing charts, ordering books, and other trading instruments as needed.
Institutional OTC Trading
Kraken’s Over-the-Counter (OTC) desk is a premium service designed to cater to the specific needs of institutional clients and high-net-worth individuals who require large-volume cryptocurrency trades. Unlike traditional exchange trading, OTC transactions are conducted privately outside the open market.
API Center
Kraken also has an Application Programming Interface (API) Center that enables developers and traders to interact with the exchange programmatically. This allows for automated trading strategies, custom applications, and efficient asset management.
Currently, Kraken has three APIs:
- REST API – This standard HTTP-based API provides a request-response model. You send a request to a specific endpoint and receive a response.
- Websocket API – This API offers real-time, two-way communication between your application and Kraken. It is ideal for streaming market data and receiving updates instantly.
- FIX API – This is a more complex protocol primarily used by institutions for high-frequency trading.
Support
Kraken offers a comprehensive support guide and a Reddit sub for escalating tickets. Their support may take a few days to respond to tickets, but is generally helpful.
Fees
Kraken’s trading fees are dependent on which currency pair you trade. In general, they are very low. The company employs a maker-taker fee schedule, meaning you pay a different fee depending on whether you buy or sell.
The only issue is that their fees are incredibly complex, volume-based, and tricky to grasp. Here are a few things you should know:
- If you use the “Simple” buy mechanism, you pay 0.26%.
- If you are a market maker, you pay 0.16%.
- If you increase your volume to over $50,000 worth of BTC, you can pay to as low as 0%.
Chances are that you won’t be doing volume as heavy as $50,000, so expect to pay around 0.26% as a taker.
Is Kraken Safe?
With all the horror stories about scam exchanges, Ponzi schemes, and million-dollar hacks, we are not surprised to see the web full of these questions. Users wanted to know if the Kraken exchange was just another scam or if it was legit.
Well, we dug deep into the dirt and found some promising information:
Kraken places a huge emphasis on its security, stating that safeguarding customer funds and privacy is its number one objective. Kraken stores consumer funds in a combination of hardware wallets and hot wallets. They also keep their devices in cages which are kept under 24/7 surveillance by armed guards, alarm systems, and security cameras.
Moreover, the exchange regularly conducts penetration testing to identify and address potential vulnerabilities. Kraken also offers a bug bounty program that incentivizes security researchers to report any security flaws, helping maintain a strong defense against threats.
All the clues point toward solid security, and the company has never suffered a hack.
However, it was not until June 2024 that the exchange suffered a significant security breach. An unidentified security researcher exploited a critical zero-day vulnerability in the platform’s user interface to siphon off approximately $3 million in digital assets.
The vulnerability, discovered through Kraken’s bug bounty program, allowed attackers to artificially inflate their account balances without completing the entire deposit process. This enabled them to “print” assets in their accounts, effectively stealing from the exchange’s reserves.
Despite being caught, the security researcher who discovered the flaw refused to return the stolen funds. Kraken’s Chief Security Officer, Nicholas Percoco, described the situation as “extortion” rather than legitimate white-hat hacking. The researcher allegedly shared the vulnerability details with two others, who also exploited the flaw to withdraw funds. Kraken swiftly identified and patched the vulnerability, preventing further exploitation.
Legal Issues With The US SEC
In November 2023, the Securities and Exchange Commission (SEC) filed a lawsuit against Kraken, alleging that it operated as an unregistered securities exchange, broker, dealer, and clearing agency.
The SEC’s primary contention was that Kraken’s staking programs, which allowed users to earn rewards for holding specific cryptocurrencies, constituted investment contracts and were, therefore, securities. This meant Kraken should have registered with the SEC before offering these services.
Kraken strongly defended its position, arguing that its staking programs were not securities. The exchange contended that users were simply earning rewards for participating in the underlying blockchain network and that there was no expectation of profits generated by Kraken itself.
Six months later, in August 2024, US District Judge William H. Orrick ruled that Kraken must face an SEC lawsuit alleging securities violations. According to the court’s ruling, the SEC has made a plausible case that certain activities on Kraken’s platform involve securities, subjecting them to federal securities laws.
The ruling is a setback in the industry’s ongoing tussle with the SEC to define which cryptocurrencies, if any, qualify as “securities” under US law and, therefore, fall under the SEC’s jurisdiction.
Pros And Cons
Pros
- Their crypto withdrawals are more competitive than most.
- The platform has access to the world’s most common fiat currencies, making life easier and offering lucrative trading possibilities.
- The platform is usually one of the top 5th or 6th exchanges in terms of 24-hour volume. It currently sits in 8th.
Cons
- Kraken’s verification tiers and confusing trade interface are not beginner-friendly.
- With about 300+ coins and 700+ pairs to choose from, Kraken’s listings are still limited compared to those of its competitors.
- In periods of high market volatility or trading volume, users may encounter delays in order execution.
- Kraken has an ongoing case with the Securities and Exchange Commission (SEC).
Final Thoughts
Kraken is a liquid exchange that offers a great trading experience. Its high-volume order books, comprehensive fiat currency options, and smooth UX work together to make trading fun and enjoyable. From its detailed trading tools to margin trading and lending, it gives users many ways to make good money. And it is easy to get money off the site cheaply.
The platform is secure, well-connected, and transparent, notably because it has been in business for thirteen years. Overall, it is a good exchange for experienced traders who can take advantage of all it has to offer.
