Kraken Exchange Review: Global Bitcoin Exchange

Description

Kraken is an exchange that enables you to buy, sell, and trade bitcoin. It supports multiple payment options, including bank transfers, debit/credit cards, Apple Pay, and Google Pay. The account can be funded with traditional currencies or bitcoin sent from other wallets or exchanges, for example, Luno and Coinbase.

Kraken provides an API for developers to integrate with their platform and a wide range of features, such as margin trading, futures trading, and staking. Furthermore, it supports the Lightning Network for faster and cheaper transactions.

How to Buy Bitcoin on Kraken

To start using Kraken, create an account on the platform’s official website or use an app for iOS or Android devices. Verify your email address, enter a PIN or choose the biometrics option to open the app every time you use it. After that, set up a two-factor authentication (2FA) via the authenticator app or security key (you can choose hardware wallets like Trezor or Ledger for this).

The next step is to verify your identity to access more features and higher limits. There are the following levels: Starter, Express (available in the US only, excluding NY, TX, WA, and overseas US Territories), Intermediate, and Pro. Fund your account with a payment method available in your country in USD, EUR, CAD, JPY, GBP, CHF, or AUD and buy or sell bitcoin.

Kraken Features

• Kraken Pro. Kraken Pro is a cryptocurrency exchange platform tailored for advanced traders, offering a tiered fee structure that decreases with higher trading volumes, ranging from 0% to 0.26%, making it cost-effective for frequent trades. Key features include margin trading, dark pool access, and spot trading, providing users with a wide range of powerful tools. Kraken Pro is best suited for experienced traders who require advanced functionality and customization options, though its complexity may be overwhelming for beginners.
• Futures. Bitcoin futures allow you to invest in the future price of bitcoin and make a profit if the difference in its value has been correctly predicted. The advantage of bitcoin futures contracts among the platform users is the ability to make profits in a short period of time.
• Staking. It is a feature to earn passive income investing bitcoin. The exchange offers bets on various financial instruments; the reward is received twice a week.
• Margin trading. Kraken can lend you money for further investment. This is done by allowing you to trade with more funds than you have in your account. If you profit on the trade, you get to keep the profits minus the interest you owe the platform. However, if the trade goes against you, you will be responsible for covering the losses plus the interest you owe Kraken.
• Kraken recurring buys. Invest a fixed amount of money at regular intervals following the Dollar Cost Averaging (DCA) strategy to reduce the impact of market volatility.

Kraken Verification Levels and Limits

Kraken has a variety of trading limits based on the user’s trading volume and verification level. For example, a Starter account holder can only withdraw up to $2,500 per day, while an Intermediate account holder can withdraw up to $500,000 per day.

Kraken offers three verification levels, catering to users with varying needs. The Starter Level, requiring only an email and password, permits basic trading with limited daily transaction amounts. The Intermediate Level involves additional verification steps, such as providing a government ID and proof of address, offering increased limits and access to features like margin trading and staking. The Pro Level, with stringent requirements like enhanced verification documents, provides the highest limits and comprehensive access to all Kraken features, including margin trading, staking, Dark Pool trading, and priority customer support.

Which is Better, Kraken or Kraken Pro

Kraken is the original and standard platform designed for beginners or casual users who want a simple, straightforward way to buy, sell, and hold Bitcoin. It features an intuitive interface, easy navigation, and simplified options for making trades or converting currencies. Kraken’s basic platform is great for those who prefer ease of use over technical details or advanced trading options.

Kraken Pro, on the other hand, is an advanced platform tailored for more experienced traders. It offers a more comprehensive trading interface with features like customizable charts, advanced order types (e.g., stop-loss, limit orders), and lower fees. Kraken Pro allows users to access deeper liquidity and detailed market data, providing more control over trades.

Kraken vs Kraken Pro

• Fees: Kraken Pro has lower fees compared to the basic Kraken platform, especially when making large trades. This can significantly impact high-frequency or large-volume traders.
• Interface: Kraken’s basic interface is simpler and designed for ease of use, whereas Kraken Pro has a more detailed interface that allows traders to make complex orders and analyze the market more deeply.
• Features: Kraken Pro offers a wider array of advanced tools for technical analysis and trading, which might be overkill for casual users but invaluable for professionals.

For beginners, Kraken’s basic platform is better suited for newcomers who want a simple experience and don’t require advanced trading tools. It’s an ideal starting point for those getting into Bitcoin or cryptocurrency trading. For experienced traders, Kraken Pro is the better option for traders who need lower fees and advanced features. It’s particularly suitable for those looking to engage in large trades, utilize advanced order types, or conduct in-depth market analysis.

Ultimately, if you’re just starting, Kraken provides an easy entry point, but as you grow more comfortable with trading, Kraken Pro’s features and fee structure make it the superior choice for serious traders.

Kraken Fees

Kraken offers two distinct fee structures based on transaction size, payment method, and market conditions and the platform you choose: the standard Kraken platform and Kraken Pro. On the standard platform, fees are dynamic and vary according to your 30-day trading volume. Market orders incur a maker fee and a taker fee, while limit orders generally have lower fees depending on your trading volume. This dynamic fee model benefits high-volume traders by reducing fees as their trading activity increases. The standard platform is designed for ease of use, making it accessible to casual traders.

In contrast, Kraken Pro caters to more active and professional traders with a tiered fee structure. Fees range from 0.16% maker and 0.26% taker for lower-volume traders to 0.00% maker and 0.10% taker for those in the highest volume tiers. This detailed fee structure rewards high-volume traders with lower costs and provides advanced trading tools and features that are ideal for experienced users.

Card transaction fees are clearly displayed on the final confirmation page, ensuring that there are no hidden or additional fees. The total amount shown on this page is exactly what Kraken will charge to your card. This transparent approach ensures that users know the final transaction cost before completing their purchase.

Kraken does not charge fees for transferring funds to and from the Futures wallet, storing funds, account inactivity, or account maintenance.

However, it’s worth noting that Kraken’s fee structures can be a bit complicated, especially for beginners. The varying fee tiers and dynamic models may be challenging for new users to navigate, making it important to fully understand the fee schedules to avoid unexpected costs.

Kraken Supported Countries

Kraken supports clients from around the globe, although there are a few specific exceptions based on international and local financial regulations. Depending on your verified residency, your account may have certain restrictions in place. For example, some regions are not yet able to use debit or credit cards. Here’s the full list of countries supported by Kraken.

Is Kraken Legit and Safe?

Kraken is known for the strengths in its platform security. It has never succumbed to a major security breach. The platform implements robust security practices such as cold storage for 95% of user funds, two-factor authentication, and regular security audits.

However, Kraken faces certain weaknesses that merit attention. In November 2023, the U.S. Securities and Exchange Commission (SEC) charged Kraken with illegally operating as an unregistered securities exchange, broker, dealer, and clearing agency. This legal action raises concerns about potential legal troubles and regulatory compliance issues, posing a challenge to Kraken’s reputation and stability. The SEC further alleges that Kraken commingles customer funds with its own, potentially introducing risks in the event of insolvency.

It is essential to note that Kraken is a centralized exchange, meaning it holds user funds in custodial wallets, which can be vulnerable to risks associated with centralized entities. Users should exercise caution when using Kraken or any other centralized exchange, considering the potential risks involved, such as the risk of fund loss due to insolvency or legal issues.

The SEC’s complaint also alleges that Kraken’s business practices, deficient internal controls, and poor recordkeeping practices present a range of risks for its customers. As alleged in the complaint, Kraken commingles its customers’ money with its own, including paying operational expenses directly from accounts that hold customer cash. Kraken also allegedly commingles its customers’ crypto assets with its own, creating what its own auditor had identified as “a significant risk of loss” to its customers. – U.S. Securities and Exchange Commission (2023)

Is Kraken a Good Exchange?

In conclusion, while Kraken offers a wide range of features such as margin trading, futures, staking, and support for the Lightning Network, it has several downsides. One significant concern is the recurring issue of customer support, with many users reporting complaints about poor service and accounts being locked without warning. This lack of transparency and support can be especially risky for beginners.

Furthermore, Kraken is not a Bitcoin-only exchange, and it frequently pushes other cryptocurrencies (shitcoins), which can create confusion and additional risks for novice users. If you are seeking a more straightforward and Bitcoin-focused experience, Kraken might not be the ideal choice, particularly given its potential regulatory risks.

Additionally, unlike non KYC exchanges such as Hodl Hodl, Relai, and Peach Bitcoin, Kraken is a KYC exchange, requiring users to submit personal information, which may not align with privacy-focused users. It is also custodial, meaning Kraken controls your private keys, which can expose you to risks associated with third-party custody.

Alternatives for Buying Bitcoin With SEPA

If you are in Europe, you can buy bitcoin with SEPA using Kraken. However, there are other options as shown below.

More Information

• List of supported countries
• Follow Kraken updates: @krakenfx