\ Kraken Exchange Review - Excellent Platform, Low Fees, Trade on Margin
Cryptos
  • Bitcoin
  • Ethereum
  • Litecoin
  • Augur
  • Bitcoin Cash
  • Cardano
  • Dash
  • EOS
  • Gnosis
  • Monero
  • Ripple
  • Tether
  • Zcash
Additional info
  • Maker: 0.16-0.0%; Taker: 0.26-0.1%
    Trading Fees
  • Spot Margin
    Margin Trading
  • support@kraken.com
    Email
Target Market
  • Canada, European Economic Area
Deposit
  • Credit Card, Bank Wire, SEPA
Currencies
  • EUR
Pros
  • Leading EUR exchange by volume
  • Low trading and banking fees
  • Excellent assortment of Euro cryptoasset markets
Cons
  • Volume lags a bit in btc/usd
  • The platform has been unsteady at higher volumes.

Summary

Kraken is the top exchange for euro bitcoin traders. The trading platform, which is arguably the best of all the bitcoin exchanges, is number one in terms of BTC/EUR trading volume.  With the acquisition of Coinsetter and the impending launch of the Kraken trading platform in the US, a serious competitor for Coinbase could be in the making.

Kraken has recently slashed trading fees, catapulting what was already a competitive structure into top two or three.  Kraken’s partnership with Munich-based Fidor Bank means that european traders can deposit and withdraw euro cheaply, and a recent collaboration with Vogogo sets Kraken up to take a large chunk of the Canadian market.

Kraken has demonstrated a responsible approach to security, investing millions in ensuring coins are securely stored on behalf of clients, and a 100% reserve strategy has been verified by third party audit.  One also can feel that the Kraken team genuinely loves the bitcoin and cryptocurrency project, has done much to further its image and, when required, to manage its crises.  It’s nice to trade with the good guys.

Kraken is one of the best products in the market, period. For European traders, Kraken is hands down the best bitcoin exchange option.

Security

Kraken holds the majority of bitcoin offline – cold storage, in other words – with “air gap” isolation from any online network, making hacking theft nearly impossible. Only the funds required to maintain operational liquidity are held in hot wallets. In the aftermath of the Mt. Gox fiasco, Kraken was the first to develop and pass a cryptographically verified proof of reserves audit, which showed over 100% of customer funds were held in Kraken wallets.  The audit didn’t fully eliminate the need for additional third party verification, but Kraken nonetheless pioneered the process which was followed by many exchanges later.

Servers are held in secure facilities with, according to the description, “armed guards, video surveillance, retina scanners, the works”. Sensitive data is encrypted and broken to shards, with information distributed across isolated systems, with redundancy.

On the client side, there is two factor authentication offered on account login, deposits and withdrawals. PGP public-key encryption is available to set up encrypted email communication with Kraken. This allows sensitive information – such as password recovery details – an additional level of security, while reassuring users that the communication could only have come from Kraken. Additionally, there is a global setting lock, which locks any account changes from taking place within a predetermined period of time. Were changes attempted within this time period, the user would be immediately notified by Kraken.

Gravitas

Jesse Powell is the founder and CEO of Kraken, and the company, with approximately 25 employees, is run from offices located on Market Street in San Francisco, CA. The company has raised a total of $6.5 million venture capital, with the latest $5 million coming in March of 2014. According to Mr. Powell, this money would be used mostly for compliance and security. Kraken is registered with FinCEN as a money services business.

Mr. Powell leads a group of talented executives, who have demonstrated consistent dedication to the operations of the exchange in particular and to the bitcoin industry in general. Kraken has a proven track record of stable exchange operations, a responsible position towards compliance and regulation, has invested heavily in security, and was the first to submit to reserve auditing.

As a result, Mr. Powell and Kraken have developed a position of leadership within the industry. This has manifested in a number of different ways.

Kraken is the sole exchange selected to support the investigation into Mt. Gox’s missing bitcoins and support logistically and otherwise the distribution of remaining assets to creditors. According to Mr. Powell, “[Kraken] decided to volunteer our resources and expertise in an attempt to minimize damage to creditors, restore faith in the Bitcoin Community, and demonstrate leadership in the industry”.

Coinbase and Kraken were the two exchanges chosen for integration into the Bloomberg terminal, which is a testament of Bloomberg’s faith in Kraken’s (and Coinbase’s) stable platform, conservative compliance strategy, and transparency of operations. That Bloomberg picked Kraken is a big vote of confidence, and could pave the way for a massive influx of liquidity should Bloomberg open the doors to trading through the terminal, which is watch-only until the regulatory position on bitcoin trading is clarified.

Kraken has a well-deserved reputation as a leader in the bitcoin industry, due to exemplary exchange operations and technology, responsible reserve management and compliance positioning and heavy investment in security.

Opening an account

Account PermissionsTier 1Tier 2Tier 3
DailyMonthlyDailyMonthlyDailyMonthly
Fiat deposit and withdrawal limitsN/AN/A$2,000/$2,000$10,000/$10,000 $25,000/$25,000 $200,000/$200,000
Crypto deposit and withdrawal limits (fiat equivalent)No limit/ $2,500No limit / $20,000No limit /$5,000 No limit/$50,000No limit/$50,000 No limit/$200,000
Verification requirementsStandard biographicalAddress VerificationGovernment ID and verified proof of residence. Social Security number for US residents, ID confirm photo for German residents

*Tier 3 verification is required for margin trading

 SEPA (EEA)  Bank Wire INTERAC EFT 
DepositWithdrawalDepositWithdrawalDepositWithdrawalDepositWithdrawal
EUFree€0.09 €5€40 (non EEA) NA NA NA NA
CADN/AN/AN/AN/A1.5% ($5 min fee)*N/A1.5%($5 min fee)*1.5% ($10/$75 min/max fee)
USDN/AN/A0.19% ($20 min)0.19% ($20 min)N/AN/AN/AN/A
GBP0.19% (£10 min)0.19% (£10 min)0.19% (£10 min)0.19% (£10 min)N/AN/AN/AN/A

*$5,000 CAD max deposit
**$10,000 CAD max deposit

Kraken Software review

Kraken’s software is among the best in the industry for professional and beginning bitcoin traders alike. The kraken platform allows for many of the same functions ubiquitous in the forex and stock trading markets – stop loss and take profit orders, trailing stop loss, margin trading/leveraged positions, limit orders and short positions, for example.

Kraken’s user interface is designed with both beginning and expert traders in mind. Orders are separated simple, intermediate and advanced templates, avoiding bombarding beginning users with a number of different options which would most likely serve only to confuse. The trading overview tab displays all relevant account, trading and market information. A more in-depth trade log is easily accessible by toggling through the different tabs.

The simple interface offers buy and sell limit and market orders. The prevailing current rate is displayed in the “EUR” box, so users are easily able to determine market rate. Orders can be placed simply by inputting the amount of BTC or EUR to buy or sell, and clicking the buy/sell button.

The intermediate interface offers additional features, including a currency pair selector and leverages up to 3 times. Custom start times are offered, as well as multiple expirations including good until cancelled, good this day, good this week, good this month, and custom.  You can also choose in which currency your fee is taken.

The advanced order slip offers the same functionality as the intermediate interface, with an additional number of advanced orders including stop loss, take profit, trailing stops and take profit limit.  Conditional close orders are also introduced, which allow traders to set up, for instance, limit orders with a conditional stop loss.  If the order is filled, the stop loss will automatically be assigned and trigger in the event the price drops to the stop level.

The order book runs across the bottom of the trading platform, and a more in-depth look can be found under the “charts” tab, located at the top of the site.

Kraken advanced trading

Kraken provides users trading functionalities that allow for a number of different more sophisticated trading techniques. Below we outline with examples how to utilize these features.

Limit orders and leverage

You fund your account with $2000. Let’s imagine bitcoin is currently $80, and you believe that, at $100, it is entering overbought territory. You place a limit sell order to short 20 shares at $100, which will automatically be filled should bitcoin reach such a level. This would, obviously, cost $2,000. But let’s further imagine you decide to use a 2:1 leverage – so you sell 20 shares for $2,000 – using $1,000 of your own money, with $1,000 borrowed. Every $1 the coins fall would earn you $20. Conversely, every $1 the coin rises would cost you $20.

Trading on margin

Kraken requires that initial margined trades are supported with a 100% margin balance – meaning that your account equity must at least equal the borrowed amount. If your position were to fall (heaven forbid) you would receive an automated margin call at approximately the 75-80% level. When a call is received, you would be advised to sell enough of your position to obtain at least 100% of the margin amount as equity in your account. If there is a further drop to the 35-40% level your position would automatically be liquidated.

Trading on margin offers the opportunity for large gains compared to actual market performance as well as large losses. Trade on margin with caution. If you don’t really know what you are doing, your margin positions should be relatively small, or just stay away entirely.

At a macro level, the above serves an important function for the bitcoin marketplace. Firstly, it injects precious additional liquidity into the market ecology. Secondly, with the introduction of short positions, there is an important check against an extreme bubble. It is very difficult to understand whether or not bitcoin levels are appropriate – with the ability to open short positions, there is a counterweight against, to borrow from Alan Greenspan, “irrational exuberance”.

Mobile

Kraken has released a native iOS app, and a web-based Android version, though they have not yet released an app. The mobile products possess the same functionalities as the desktop version, optimized for hand-held devices.

Trading Fees

Executed in last 30 daysFees
Volume (USD or USD equivalent)MakerTaker
<$10,0000.16%0.26%
<$50,0000.14%0.24%
<$100,0000.12%0.22%
<$250,0000.10%0.20%
<$500,0000.08%0.18%
<$1,000,0000.06%0.16%
<$5,000,0000.04%0.14%
<$10,000,0000.02%0.12%
>$10,000,0000.00%0.10%

Support

Kraken has made great strides in providing exceptional service to customers and, thanks to increased resource allocation, now offers instant chat and email response coverage that is effectively 24/7.

Kraken might not be for you if:

You are a USD trader.

Kraken’s USP is their euro markets, which are highly liquid.  For USD there are better options out there; we prefer bitfinex for non-US residents, particularly those looking to for margin trading the spot market.  Check out the best bitcoin exchanges in the United States for alternatives.

You are looking to day trade.

BitMex is the top Futures Exchange in the marketplace – if you are looking for leverage or high volume trading it is worth having a look.

Unfortunately, the Kraken platform has been a bit unstable as of late.  A victim of their success it seems (and the wider success of the market) a massive influx of traffic has led to outages and connectivity issues.  They are working on scaling their infrastructure – which to be fair should perform well during normal market periods.  Check out our rankings of the best bitcoin exchanges if you need a back up.

Bottom line

The Kraken bitcoin exchange is an industry leader in terms of trading platform and exchange operations, security and compliance, and reserve management. The management team is dedicated to improving the Kraken product as well as doing their bit to enhance the reputation of bitcoin and aid in its wider adoption.

For those European traders wishing to avoid transfer and conversion fees, Kraken provides the most BTC/EUR liquidity in the marketplace, and a Eurozone banking relationship facilitating preferential SEPA transfer rates.

For euro bitcoin trading, Kraken is arguably the best exchange in the market.