Is Kraken Safe?
In the early days of crypto trading, traders and investors started relying on cryptocurrency exchanges to convert their fiat and cryptos into their target tokens. These platforms offered high liquidity and a great variety of trading pairs they could choose from.
Over time, crypto exchanges became widely used not only for purchasing and exchanging cryptocurrencies, but for their custodial and lending services too.
However, are such exchanges secure enough? Can you really trust them with your funds? While it’s true that the advances in technology have strengthened their level of security, there have also been a number of security breaches in the last couple of years.
Today, we’ll talk about Kraken, one of the oldest and most reliable crypto exchanges available on the market, and its approach towards potential security threats.
Let’s get started!
Kraken is one of the veterans of the crypto industry, serving traders since 2011. It was founded by developer Jesse Powell and headquartered in San Francisco, California.
Powell has been actively working on various crypto projects for more than fifteen years and his expertise is precisely in cybersecurity. He got the idea to create his own crypto exchange right after the notorious hacking attack of Mt. Gox when he was hired as additional help in solving the security issues of the exchange’s website.
Above all, Powell wanted to save the reputation of crypto exchanges and prove traders they could still trust in the impenetrability of these platforms. To this day, Kraken has never been hacked.
Kraken supports over 30 cryptocurrencies that users can buy with USD, EUR, CAD, JPY, GBP, or CHF, based on their location and choice of crypto. The platform uses a maker and taker fee schedule that tracks your trading volume in the last thirty days. The fees are super affordable, starting from 0.16% for makers and 0.26% for takers.
This exchange has also been recommended for the high responsiveness of its support team, accessible 24/7 through live chat and email, and the interactive and user-friendly interface.
All crypto exchanges secure users’ accounts in one way or another, but their approach towards security really shines through in the level of financial stability they offer, the legal compliance, data and funds storage, etc.
Kraken is registered as a Money Services Business (MSB) with FinCEN in the US and FINTRAC in Canada. In the UK, it’s regulated by the Financial Conduct Authority (FCA), and in Australia, by the Australian Securities & Investments Commission. This means that Kraken complies with the AML and KYC policies of the highest regulatory bodies.
Kraken is really thorough when it comes to hiring individuals and expanding its team. The platform’s strong team of professionals is busy designing new security methods and testing both the technology and the vulnerability of the system by frequent penetration testing with an imaginable vector attack.
As far as users’ data is concerned, Kraken encrypts all sensitive data both at rest and in transit. You can be at peace knowing that no one can access and compromise your personal details and identity.
Not only your data but your funds are highly protected too! Kraken stores 95% of customers’ deposits in offline wallets known as cold storage that are safeguarded in different locations around the world.
The two-factor authentication method, or simply 2FA, is an essential layer of protection for your account and consists of using two factors or locks to make sure that only you can gain access to your account.
The user chooses a strong password as one of the factors, a mobile device, or biometric traits (e.g. the user’s fingerprint). On Kraken, a password is mandatory and then you need to choose between an Authenticator App or a Yubikey.
An Authenticator app, such as Google Authenticator, for example, generates a random 6-8 digit one-time password. A Yubikey is a hardware device that generates one-time passwords every time you use it. These methods are more secure than a standard password that remains the same for every login.
The Global Settings Lock
In case you have your password and 2FA compromised, activating Kraken’s Global Settings Lock (GSL) might save your account.
We recommend enabling this option right after you create your account and finish its customization. The GSL prevents anyone from making changes to your account and notifies you via email of any attempted unlock.
This feature is really useful if you’re planning to go on vacation or take a short break from crypto trading.
The Master Key
The Master Key is another one of Kraken’s security features that’s commonly used in combination with the GSL, 2FA, or both. It’s an alternative that can help you regain access to your account if your 2FA or email gets compromised, and gives you the option to turn off the GSL immediately (instead of waiting for the lock time to end).
To enable the Master Key, simply click on the Security section on Kraken’s interface, click “On/Off”, and choose again the desired method: an Authenticator app or Yubikey.
When it comes to email encryption, Kraken suggests using the PGP (Pretty Good Privacy) public-key encryption program. PGP assigns you a secret private key for decrypting the message and a public key shared between the sender and the receiver.
If you activate this option, you’ll be able to verify whether the automated email messages allegedly sent by Kraken are authentic or not. You’ll also receive encrypted messages from the platform in case they include sensitive instructions (e.g. how to reset your password).
In our humble opinion, Kraken seems to be a very trustworthy crypto exchange that won’t hesitate to invest in the security of their company and the safety of their users and their funds.
Platform-wise, they use data encryption, cold storage, and penetration testing to prevent potential hazardous scenarios. As far as account safety is concerned, Kraken has some unique features like its GSL and Master Key protection.
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Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.