Kraken Crypto Trading Fees: The Hidden Costs and How to Minimize Them

It was a decision that would cost her thousands. The moment Maria clicked “Confirm Trade” on Kraken, she was hit with a realization—she had overlooked something crucial. The hidden fees. How did she miss it? The sleek interface of Kraken had lulled her into thinking it was all straightforward. But crypto trading platforms, even Kraken, a well-respected giant, come with a complex fee structure that can eat into your profits.

Maria had been trading Bitcoin, lured by Kraken's reputation for security and liquidity. Yet, as she analyzed her trades, the fees started to stack up like an invisible tax. What Kraken didn't advertise on its homepage were the numerous layers of fees, each nibbling at her margins.

Let’s break it down.

Trading Fees: The Basics

At its core, Kraken charges trading fees based on a maker-taker system. This system rewards those who provide liquidity (makers) with lower fees and charges those who take liquidity (takers) a bit more. But the subtle difference between a maker and a taker isn’t always clear to beginners.

• Maker fees: Typically range from 0.00% to 0.16%, depending on your 30-day trading volume. Sounds appealing, right? But the catch is, you only get this rate if your order isn’t executed immediately. You’re “making” the market by placing an order that doesn't instantly match a buyer or seller.

• Taker fees: These are higher, ranging from 0.10% to 0.26%. This fee kicks in if your order gets filled immediately, meaning you're “taking” liquidity out of the market. Most retail traders fall into this category because they execute trades at market price for quick results.

Here’s a visual breakdown to make it clearer:

30-Day Volume (USD)	Maker Fee	Taker Fee
$0 - $50,000	0.16%	0.26%
$50,001 - $100,000	0.14%	0.24%
$100,001 - $250,000	0.12%	0.22%
$250,001 - $500,000	0.10%	0.20%
$500,001 - $1,000,000	0.08%	0.18%
$1,000,001 - $2,500,000	0.06%	0.16%

The problem? Most traders end up paying the taker fee, especially when they prioritize quick executions.

Deposit and Withdrawal Fees: The Unseen Barrier

Maria learned the hard way that it's not just the trading fees that hurt; Kraken also charges for deposits and withdrawals. While trading fees might seem small, they quickly add up when you factor in deposit and withdrawal costs.

• Crypto Deposits: Generally free, but this depends on the coin. However, transferring large sums from wallets outside of Kraken can come with network fees that vary by cryptocurrency.

• Crypto Withdrawals: This is where Kraken gets you. Every time Maria moved her funds out of Kraken, she was hit with withdrawal fees, which vary based on the coin. For example:

  • Bitcoin (BTC) withdrawal: 0.00015 BTC
  • Ethereum (ETH) withdrawal: 0.005 ETH
  • USDT withdrawal (on Ethereum): 10 USDT

These fees might seem insignificant at first glance, but for frequent traders, they build up quickly, eating into potential profits. Worse still, Kraken doesn’t waive these fees for high-volume traders.

Funding Options: The Fiat Fees

When Maria wanted to add more fiat currency to her Kraken account, she encountered another unexpected fee. While Kraken offers various deposit methods, including bank transfers, each comes with its own cost structure.

• Bank Transfer (FedWire): Free deposits but withdrawals come with a $5 fee.
• SWIFT Transfers: Cost Maria around $35 per deposit, depending on the bank and location.

For international users, these fees are a significant barrier, especially when trying to deposit smaller amounts.

Kraken Pro vs. Kraken: The Fee Dilemma

Like many traders, Maria initially used Kraken’s standard platform. But what Kraken subtly encourages is a move to Kraken Pro, where the fee structure is slightly more favorable. However, even on Kraken Pro, the fees are still substantial for the average retail trader.

On Kraken Pro, you might think you're getting the best deal, but unless you're trading volumes over $1 million per month, the fee difference between Kraken and Kraken Pro isn’t as large as you'd hope.

Maria’s next move?

She started using Kraken Pro, but even there, the maker-taker fee structure still meant she was paying more than she wanted. Worse, high-frequency traders like Maria are prone to falling into the taker category, which incurs the highest fees.

Strategies to Minimize Kraken Fees

Maria eventually realized that the only way to reduce Kraken’s fees was by being strategic.

1. Opt for Maker Orders: Whenever possible, Maria started placing limit orders instead of market orders. This allowed her to qualify for the lower maker fee, rather than always paying the taker fee.

2. Increase Trading Volume: Kraken’s tiered fee system rewards higher trading volumes. By consolidating her trades and focusing on fewer, larger transactions, Maria could gradually move into lower fee brackets.

3. Use Cheaper Cryptos for Transfers: Instead of always using Bitcoin for withdrawals, Maria started converting her funds to cheaper cryptocurrencies like Litecoin or Stellar for transfers. This simple change saved her significantly on withdrawal fees.

4. Take Advantage of Staking Rewards: To offset her trading fees, Maria started staking her crypto on Kraken. By staking assets like Polkadot or Ethereum 2.0, she earned rewards that helped cushion the impact of trading fees.

The Final Lesson

Maria’s experience with Kraken taught her a valuable lesson: while Kraken is a highly reputable and secure platform, the fees are not to be underestimated. By understanding the different types of fees and being strategic with her trades, Maria was able to minimize the impact of those fees on her bottom line.

For any trader thinking of using Kraken, it's crucial to dig deep into the fee structure and adjust your trading strategy accordingly. Remember, even the best crypto platforms come with a cost, and it's up to you to minimize it.