The triumphant rise of cryptocurrency in recent years has paved the way for relatively small players in the space to establish themselves as trading juggernauts. In this post we’ll provide a complete Kraken review, covering everything you need to know about this exchange; from fees and trading limits to common questions you need to know.
Overview of Kraken
If you’ve traded cryptocurrency, you’ve almost without a doubt heard of Coinbase. While great for beginners, some users find Coinbase just too simple (read our full review here). If you fall into this category, or are simply looking for a powerful trading platform, then you need to check out Kraken.
Aside from Coinbase, Kraken is arguably one of the largest and most well-known cryptocurrency exchanges in the United States, and claims to be the largest exchange in the world in terms of “Euro volume and liquidity”. It offers a robust trading platform, a wide variety of cryptocurrencies to trade, and a host of other options to maximize the trading experience.
After getting kicked off Coinbase for no apparent reason a year ago, I’ve been a loyal Kraken user ever since. Minus a few hiccups here and there, I’ve been pleasantly satisfied with the platform.
Here’s a quick and dirty overview of how Kraken works, packed into a 5 minute video summary:
Cryptocurrencies that Kraken supports:
Kraken is very diverse in the cryptocurrencies they allow you to trade. While they don’t offer as many options as some other exchanges, they do have a lot of the most popular and widely-traded currency pairs.
Here’s a recent screenshot of the currency pairs I’m allowed to trade within my own account:
This may go against what a lot of the speculators believe, but I think the limited trading pairs actually sets Kraken apart from other cryptocurrency exchanges. The pairs allow traders access to some of the most popular and well-established coins, but also keeps them away from the sketchy, lesser-known and higher-risk currencies (I’m looking at you ICOs).
For a full list of currency pairs available to you, visit the Fee Schedule page on the Kraken Exchange website.
Where Kraken shines:
- High trading limits
- Relatively low fees (tiered – great for small traders)
- Simple yet powerful interface geared towards intermediate traders
- Margin trading is supported, allowing users to use leverage for greater exposure
- Customer support. It takes a while to get a response but when you do they help you out a lot.
Disadvantages of Kraken:
- Confusing limits (Kraken daily/monthly/annual limits are different than Synapse limits)
- That time they went offline and users had severe Mt. Got flashbacks
- Buggy trade transactions that can leave you guessing if your trade went through or not. You may have to find out when you log in again. (Although with the recent upgrade it looks like these issues are less prevalent than before)
- When you mention that you trade on Kraken, be prepared for the person on the other end of the conversation to make a minimum of one “Release the Kraken” references. Every. Dang. Time.
Kraken Fees and Liquidity
Kraken fees are relatively low compared to exchanges like Coinbase. Since Kraken has higher limits and a wide range of digital currency, it appears they profit off large trades rather than nickel and diming their customers.
Fees on the Kraken Exchange
Kraken’s fee structure is tiered, and the fee that you pay depends on how much volume you actually move through the exchange. These fees are considerably lower than many other exchanges, which is a huge advantage for many traders.
Since fees are tiered, the amount taken from every transaction is dependent on which Tier your account is in, and how much you actually trade. The higher tier level you are, and the bigger the order, the smaller the fee.
For example, a Tier 4 account making a trade of $100,000 will pay much less of a fee than a Tier 2 account trading making a trade worth $1,000.
For a full fee schedule list and additional information regarding how Kraken fees apply to you, check out their official Fee Schedule page.
In terms of liquidity, I’ve personally had a very hard time getting my funds out of Kraken and into my bank account. This is an issue I am still facing to this day.
I made a few successful outgoing wire transfers, but when I hit the hidden limit, that’s where things got complicated.
For those of you that don’t know, from what I understand, Kraken users have a maximum limit for the amount of funds they can deposit and withdraw. Both count towards your cumulative limit, which is calculated by adding up the total sum of both deposits and withdrawals.
For example, if you have a $50,000 annual fiat currency limit, and you deposit $25,000, invest it, then decide you want to take $25,000 out, you’ve then hit your maximum limit for the year. Regardless of how you space the deposits of withdrawals out, whether it be daily or monthly, once you hit that limit that’s it.
But it’s not quite as straightforward as it seems.
I also learned that Kraken’s limits are much different from their ACH partner, SynapsePay. When you navigate to the deposit or withdrawal page, you’ll notice a limit that looks something like the screenshot below (varies by user and verification tier). This is Kraken’s limits. The Synapse limits are actually much less than the limits appear. (you can find fiat limits here).
From the funding tab, it appears that my Tier 4 account allows me to deposit or withdraw $100,000 per day, or $500,000 per month. This is not correct. In reality, I can only deposit and withdraw an annual fiat amount of $100,000.
The long short: if you don’t have a corporate account and have sent in verification proof of where the funds came from, you’re pretty much only going to be able to withdraw a maximum of $100,000. This is more than the average user has in their accounts, but for early adopters and users willing to hold, this could become a bigger issue if prices keep rising.
Why is this an issue? I have no idea, but I think the exchange should make this a bit clearer to avoid confusion.
Kraken Account Tier Types
As we outlined above, Kraken account tiers mainly affect the fee structure and funding limits. The higher tier you are, the less you’ll pay in fees, and the more you’ll be able to deposit and withdraw.
Since Kraken is heavily regulated, upgrading to each higher tier also requires the exchange to collect more user information. If you are trying to trade Bitcoin anonymously or avoid taxes on a high tier, don’t try. In the United States, the IRS is definitely watching.
There are 4 different tier levels by default, but if you still need higher limits you can talk to customer support about a corporate account. Corporate accounts take things to the next level, and you can set custom limits that are directly negotiated with Kraken’s payment partner, Synapsepay.
Tier 0 is the lowest tier for Kraken accounts and allows users to learn about the exchange before they make a trade or deposit. In this tier, users are not allowed to deposit, trade, or withdraw funds of any type.
- Email address
Upgrading to a Tier 1 Kraken account is the next step for interested users. Upgrading to this level takes just a few clicks and verifications are completed very quickly. With the recent influx of new users, this typically takes one to three days.
This tier allows users to trade digital currencies and sell to fiat currency, but limits deposits and withdrawals to digital currency only.
Additional information required:
- Full name
- Date of birth
- Phone number
Tier 2 unlocks the ability to deposit and withdraw fiat currency. The funding and trading limits are increased, allowing users to trade more and leverage upside in volume. Like a Tier 2 account, when requesting a Tier upgrade, expect to wait a few days for customer support to fulfill your request.
Additional information required:
In this tier, all limits are substantially higher than the previous tiers. In the case of funding, the amounts increase to allow a daily deposit of $25,000 and a maximum monthly limit of $200,000. Withdrawal limits also increase to reflect the same amounts.
The downside? With these types of limits, users can expect to get personal with their information. It’s a pretty well-known fact that the IRS is going after accounts that initiate trades worth over $20,000, so expect to be watched. I always suggest paying taxes on cryptocurrency, but if you upgrade to this tier, definitely heed that advice.
Additional information required:
- Valid Government ID
- Recent proof of residence
- In some cases, a photo ID confirmation
Upgrading a Kraken account from Tier 3 to Tier 4 doesn’t change much other than the limits again. A Tier 4 account can either be personal or corporate, depending on your specific trading needs. Most users won’t need this level of trading volume and fiat limits, but it’s there for those that do.
A Tier 4 account allows users to deposit and withdraw incredibly high amounts, to the tune of $100,000 daily and $500,000 monthly. To upgrade, you’ll need to contact support and set everything custom to you.
Additional information required:
- Signed application form and KYC documents
Is Kraken safe?
Being based in the United States affords Kraken users a large amount of security due to the high regulation the exchange experiences. They also leverage a large amount of security practices to keep funds, accounts, and communications safe.
A few of the most common Kraken security practices include:
- Customers are encouraged to enable two factor authentication on their acounts
- New deposits are held in cold storage, which is air-gapped for further security
- All wallets are encrypted
- Emails are encrypted with PGP/GPG and can use email signature/verification
- Kraken’s data center is incredibly secure, protected by incredibly secure locks, armed guards, and more
- Staff is heavily vetted. They also use multiple sign-offs for anything remotely sensitive
- The exchange has full reserves, which according to them means a bank run is nearly impossibly
These are just a few of the most common and well-known security precautions that the exchange takes. In reality, Kraken does so much more to protect user data, deposits, and coins. While no exchange is completely secure, it’s very obvious that they are doing everything in their power to keep things safe.
There’s even more you can do from a personal level to to take security to the next level. Watch the video below to learn how to enable personal security measures to keep your tokens even safer.
Problems with Kraken
Kraken has luckily stayed out of the limelight in terms of issues. However, in early January 2018, they went offline for days (yes, you read that right – days) longer than they intended during the process of pushing an update to their trading engine. The upgrade was scheduled to last about two hours, but ended up shutting down the exchange for almost 3 days.
We are performing a system upgrade on Thursday, January 11 at approximately 5:00 UTC (Wednesday January 10 at 9 pm PT). Follow our status page for additional details before and during the upgrade. https://t.co/We6nN0WNNh
— Kraken Exchange (@krakenfx) January 10, 2018
While the Kraken team posted updates on their blog and occasionally responded to users on the subreddit /r/Kraken, in my mind they colossally dropped the ball throughout the process.
Ex: The developers were “tired” so the powers that be let them sleep. And actually put that as an update on the blog. You think I’m joking?
Kraken, 22 hours into their 2 hour scheduled maintenance, calls it a day and goes to sleep. pic.twitter.com/MPgNuwvLAh
— Buttcoin ₮ether (@ButtCoin) January 12, 2018
They also seemed eerily unpresent to quell fears that the exchange had been hacked or ran off with customer funds.
In the end, the it turned out fine, and the company compensated customers with fee-free trading until January 31.
So the big question is this: I’ve personally used Kraken quite a bit, so would I recommend it? To be honest, yes and no.
For small-time traders that are looking to place the occasional trade that the otherwise couldn’t on Coinbase or other exchanges geared towards beginners, Kraken is a great option. The simple interface, good amount of digital currency pairs, and multiple funding methods make it an attractive option.
In my entire Kraken experience, I’ve never once been confused as to how something works, and think that most users will be able to poke around and figure things out pretty quickly. Give it a try if you’re looking to upgrade to a more robust trading platform.
BUT…. for intermediate and advanced traders moving a substantial amount of volume, I would suggest those types of traders stay away. While the exchange shines in many different ways (especially the low fees) I think they really need to get their liquidity issues figured out.
I’ve been experiencing liquidity issues for well over a month, which in my mind is absolutely unacceptable. I would hate to recommend the exchange to somebody then have them face the same problems as I have been.
Who knows, that issue could be somewhat unique to me, but after a quick Google search, it looks like there’s other traders having a difficult time getting their money out and into their bank account. At any rate, once figured out my opinion will likely change.
What does it mean when the Kraken Get Verified feature has been disabled?
There’s a few reasons why you may be getting an error that the Get Verified feature has been disabled from within your Kraken account.
- The company is not verifying new accounts because their platform cannot handle more users.
- There is something wrong with the information you uploaded to the Verification tab within your account.
The best way to resolve this issue is to reach out to support for further clarification.
What is the typical Kraken verification time?
Kraken verification time depends on how many applications and how many account upgrade requests the company is getting at once. After all, some reports claim that these exchanges are seeing incredible growth in the upper tens of thousands of new accounts per day.
Tier 0, 1, and 2 verification typically takes a few minutes. However, the verification time can be much longer if the user’s account needs to be manually reviewed.
For tiers 3, 4, and corporate accounts, verification times usually take a few days, but can take much longer depending on the complexity of the account and process. For example, a Tier 3 account will only require a few pieces of documentation, while a Tier 4 account will require much more.
To expedite the Kraken verification process, include as much information as possible when talking with support reps. Because they can take at least a few days to respond to each email, the more times they have to reach out with clarification, the longer you’ll wait.