One of the most important and “oldest” exchanges today is Kraken , which is based in the United States. The interesting thing about this exchange platform is that it was born after the problems and disappearance of Mt. Gox.

What is Kraken

It is a conventional centralized exchange that offers different possibilities of use . Kraken offers the purchase and / or sale of cryptocurrencies through fiat and the exchange of cryptocurrency to cryptocurrency. In addition, this exchange is one of the most prestigious because it has been operating for many years and offers a lot of security.

The Kraken exchange is founded in 2011 by Jesse Powell in San Francisco, United States, after Mt. Gox was hacked and the funds were allegedly stolen by a malicious attacker. Although it did not start allowing Bitcoin and Litecoin trading until 2013, two years after it was founded. It should be noted that in 2015 they added the possibility of buying, selling and exchanging Ethereum.

Note that Kraken, along with Coinbase, was one of the first cryptocurrency exchanges to list on the Bloomberg terminal. Additionally, they have obtained regulatory approval from FinCEN in the US , FINTRAC in Canada , and Financial Conduct Authority (FCA) in the UK . It is registered and regulated as a digital currency exchange platform by AUSTRAC in Australia and with the FSA in Japan. Kraken was officially registered as a cryptocurrency dealer in the United States in 2018 with the Securities and Exchange Commissions (SEC).

The security of this centralized exchange is one of the company’s advantages . Thanks to its high security measures, banks, hedge funds, pension funds, large companies, among others, have entered the field of cryptocurrencies. All of these companies can trade directly with each other thanks to Kraken’s over-the-counter service. They recently acquired Crypto Facilities, a UK based cryptocurrency derivatives and index company.

Why Kraken has become popular

The reasons why Kraken has become such an important exchange are several. One of the main reasons is that in 2014 it was chosen , together with Coinbase, to offer Bitcoin trading data within the Bloomberg panel . This partnership with the leading market data provider has seen Kraken gain traction among the trading community. Thus, Bloomberg clients could access Bitcoin prices, charts, news and other information through the services of this platform.

Soon after, Kraken partnered with the world leader in charting service TradingView. I subsequently add new cryptocurrencies to the trading platform and also add buying and trading with fiat currencies such as USC, GBP and JPY.

Kraken also by the end of 2014 was chosen to “support an investigation into the missing bitcoins, as well as the distribution of the assets of Mt. Gox to the creditors”, as reported by CNBC . We recall that Mt. Gox declared bankruptcy in 2014 after having suffered an alleged hack of its platform, which led to the theft of 850,000 bitcoins.

Kraken’s selection to be part of the investigation was due to its cautious approach and strict US legislative compliance. All Mt. Gox creditors who wanted to get their funds back had to open a Kraken account. Many started using this exchange platform due to the good service it offered. All this earned him a rapid growth in volume of operations.

It was in 2016 that Kraken announced that they had made significant progress regarding Mt. Gox . They highlighted that a large part of the claims had been accepted . This enabled thousands of Mt. Gox creditors to recoup some of their funds.

Previously, in 2015 , the exchange increased in popularity by implementing new features for cryptocurrency trading. This not only allowed it to increase in popularity among general users, but also among professional traders. Features such as “margin trading” or the “dark pools” service were included. A “dark pool” allowing customers to be eligible for potentially better prices. They are allowed to discreetly place large orders that are executed against others of similar size, but with a price advantage.

How to create a Kraken account

The process of creating an account on the Kraken exchange is quite straightforward . To create the account we only need an email address, enter our username and a 12-character password that has a capital letter, a number and a symbol. Once we have it, we accept the terms and conditions of Kraken and thus create the account. Now an activation link will be sent to us by email, which we must click so that our account becomes activated.

Once we are registered, we will be asked to verify our account . There are three levels of account activation that allow us to access more or less services, as well as adjustments in the limit of deposits and withdrawals. Depending on what we want to do, we must activate one level or another. Possibly the intermediate level is the one that interests the most, since it allows you to buy cryptocurrencies with fiat money.

We must start with the basic verification, where our personal data will be requested, such as address and date of birth. For the intermediate, we must first fill in the basic level data and then we will be asked to upload some type of government identification, such as a passport, ID or similar. Finally, for the professional level, we will be asked for a receipt, which can be electricity, water, telephone, etc.

Types of user levels within Kraken

The exchanges usually have different user levels that depend on the level of personal information they provide and the volume of operation. Kraken in this sense is no exception, these levels being the following:

• Elementary Level: Basic registration system where we simply have to offer an email address. Within this level the user can only browse the exchange, explore the interface and its operation. The user of this level is not allowed to carry out operations within the platform.
• Basic Level: For this level, the user is required to provide personal information such as full name, date of birth, country of residence and telephone number. Users of this level can only make deposits and withdrawals of cryptocurrencies. They are allowed to trade with cryptocurrencies and fiat money. Cryptocurrency withdrawals are limited to $ 2,500 per day or $ 20,000 per month.
• Intermediate Level: This level requires verification of identity through some type of legal document, such as a passport, ID or similar. Fiat currency deposits and withdrawals are enabled here, but this depends on the country of residence. We can make deposits in fiat currency US $ 100,000 per day or US $ 500,000 per month. Regarding withdrawals in cryptocurrencies, a limit of 500,000 US dollars per day is established, with no monthly limit. Within this level we can also trade futures.
• Pro Level: To access this level, government identification (DNI, passport or similar) and a recent proof of residence (electricity, telephone or similar bill) are required. Deposits and withdrawals with fiat currency, as well as cryptocurrencies are unlimited. To deposit and withdraw fiat money in the United States, Canada, Japan and Germany, the “Pro Level” is required to be able to deposit and withdraw fiat currency. In addition to being able to trade futures, as in the previous level, we can also trade OTC.

User support

Kraken additionally offers 24/7 user support, either via email or online chat. Unfortunately there is no telephone number to be able to contact them.

We have to indicate that users complain that the support offered by the platform is rather bad . This is an ailment of the vast majority of exchanges, which do not usually offer a support to match. Above all, users note that the response time by email is quite delayed.

What problems has Kraken had

Although it is one of the most important exchanges in the world, not everything has been rosy. Although Kraken has not suffered any asset theft , it has suffered some problems.

In May 2017 , Kraken and Poloniex suffered a distributed denial of service (DDoS) attack . These attacks generated losses for those who operated on these two exchange platforms. Shortly thereafter, a class action lawsuit was filed against Kraken , seeking more than $ 5 million for losses caused by mishandling the DDoS attack.

This fact was a blow to the good image of Kraken, since it boasted of being a safe cryptocurrency exchange. Although they were unable to access the exchange’s systems, it remained inactive for a long period of time. Although the judgment regarding the class action lawsuit is not known, it is unlikely that they will have to pay anything. DDoS-type attacks are random and difficult to fight against.

The popularity of cryptocurrencies is evident and that has created some operational problems for Kraken. Recently, in April 2021, the exchange suffered operational problems due to an avalanche of more than 50,000 new user registrations . This generates stability problems, which would be due to a lack of foresight or poor scalability. Kraken had to deal with more than 10,000 support tickets due to the malfunction of the platform.

What security does Kraken offer

It is one of the most important exchanges, among others, due to the great security measures they implement. Remember that Kraken was born after the Mt. Gox disaster and the serious security flaws that led to the theft of all the assets of that exchange.

It was clear to Powell that to gain user trust, he had to offer a secure and transparent platform. K raken is one of the first user asset custody exchanges with proof of reserve audit. Something that makes this exchange platform highly secure for users.

Implemented security features

• Wallets cold: The 95% of the assets deposited in Kraken are stored in cold portfolios offline . If unauthorized access by an outside attacker were given, most funds would be protected from unauthorized incursion.
• Security of its servers: The exchange has servers stored in restricted access areas. It has armed security and 24/7 video monitoring , which makes it very difficult to sneak in undetected. Additionally, access to the servers is strictly regulated and controlled.
• Information security: Any user data and all sensitive information is stored in an encrypted manner. Both the system and the data have encryption, to make it impossible to use the information if it is stolen.
• Security tests: It has a large number of security specialists on staff who work exclusively on detecting vulnerabilities in the system . We can say that Kraken attacks itself in search of security holes, which are fixed immediately.
• Mandatory 2FA: The exchange forces users to activate a double authentication factor. They allow the use of Google Authenticator or YubiKey.
• There is no possibility of account recovery by phone call or SMS.
• When we carry out an asset withdrawal, an email is sent to us to confirm the operation .
• All the emails they send are signed and encrypted with PGP.
• They have a multi-level verification system.

Deposit security

The Kraken exchange is not insured by the Federal Deposit Insurance Corporation (FDIC) . This means that in the event of theft, the FDIC will not be responsible for returning up to US $ 250,000 that has been stolen. But Kraken has a $ 100 million fund of its own to cover potential asset theft.

Additionally, as explained by the exchange, its Kraken Bank division, being a bank, has the obligation under Wyoming law to maintain a 100% reserve of its deposits in fiat currency at all times . This means that if all users were to withdraw their fiat assets at the same time, they would be able to withdraw their funds without problems.

Kraken is a trusted exchange

We have seen in the previous point how Kraken takes the security of data , its facilities, user access and the protection of user assets very seriously . But in addition to gaining trust with great security, trust is earned by making users feel comfortable and being transparent.

Reservation audit

There have been several times that the exchange platform has requested an external audit. This is intended to verify that the exchange’s reserves exceed the funds of the users on the platform. Come on, if there is a hypothetical theft of user assets, Kraken has the ability to return our funds. Something that undoubtedly makes the platform gain in reliability.

Transparency

Jesse Power, CEO of Kraken, is a person with a lot of reputation within the industry. Its exchange is also transparent in the coverage of assets and the security measures they implement. The exchange platform’s investors are public and the exchange’s headquarters are in San Francisco, United States. As if all this were not enough, it is certified to operate in several countries, which are periodically audited.

Relations

This exchange has good institutional and business relationships. It has an excellent relationship with the main German banks. He has collaborated a lot with the Government of Japan for the regulation and security measures for cryptocurrency exchanges. In addition, it has a large presence in media such as Bloomberg, New York Times and Wall Street Journal.

What commissions does Kraken have

All platforms for buying, selling and exchanging between cryptocurrencies charge a commission for the maintenance of the business. Kraken is no exception, but it has a somewhat convoluted fee structure. We are going to try to tell you the commissions and fees they charge according to the type of transaction we carry out.

Account types

The daily limits are calculated by separating the fiat currencies, in Bitcoin and in the rest of altcoins. Kraken limits also depend on whether we have a “starter” account, an “intermediate” account or a “pro” account.

There is no deposit limit in terms of cryptocurrencies, but there is a limit on the amount of deposit and / or withdrawal using fiat money. Starter accounts are capped at $ 5,000 per day, Intermediate accounts are capped at $ 500,000 per day, and Pro accounts are capped at $ 10 million.

Deposit fees for Euros

Fees and minimums for fiat money deposits vary depending on the platform used for deposit. These are:

* The availability of this funder may be limited to specific regions. For more information and information on other fiat currencies, here is the Kraken link .

Withdrawal commission for Euros

Kraken also establishes a minimum withdrawal and fixed commissions, which in principle do not depend on the amount of withdrawal. Note that the exchange informs that commissions may vary without prior notice. Currently the minimum withdrawal in Euros and the commissions are:

If you want to know the withdrawal methods for other fiat currencies, we leave you here the link to Kraken .

Trading fees

The exchange platforms usually charge a commission for each operation that we establish in the market. These commissions vary depending on whether you are a maker or a taker and even the volume of capital that you move during a period of 30 days. The commissions are:

In which countries does Kraken operate

This exchange is registered in the United States and offers cryptocurrency trading around the world. We must emphasize that due to the restrictions and economic sanctions imposed by the United States, which are:

• Afghanistan
• Cuba
• Iran
• Iraq
• Japan
• North Korea
• Tajikistan
• Venezuela

Positive and negative aspects of Kraken

We are now going to make a brief summary of the strengths and weaknesses of the Kraken exchange.

Positive aspects

Final words on Kraken

The cryptocurrency exchange platform Kraken is characterized by offering high-security measures in order to protect users’ assets. These security measures are possibly the most extreme currently within exchange platforms. This has allowed the platform to gain popularity, by offering very important security measures and a backup of the funds they have available. Something that we must bear in mind is that the platform has never suffered a hack.

We explain in this article what an exchange is and how it works

Perhaps the most negative aspect of the platform is the high commissions in terms of trading. The platform does not have commissions for depositing fiat and cryptocurrencies. They do have a cryptocurrency withdrawal commission and also a fiat withdrawal commission, although the latter are fixed. Most exchanges charge a percentage of the amount we withdraw, but Kraken charges a fixed fee. Note that these high commissions serve to maintain the facilities and their security, which should not be economic.