If you’re considering Kraken as your cryptocurrency exchange, or if you’re already using it, you’re probably asking yourself one crucial question: just how safe is it in 2025? With digital assets worth billions changing hands every day and cyber threats evolving at breakneck speed, the stakes couldn’t be higher. After all, exchanges have been hacked before, and fortunes have vanished overnight.
Kraken has been around since 2011, earning a reputation as one of the most security-focused platforms in the industry. But reputations can shift, especially after incidents that shake user confidence. In 2024, the exchange experienced its first significant security breach, a stark reminder that no platform is entirely bulletproof. So, has Kraken bounced back? Does it still deserve your trust, or should you be looking elsewhere?
In this comprehensive 2025 security review, we’ll examine Kraken’s track record, dissect its current security infrastructure, compare it to major competitors, and evaluate whether it remains a safe harbour for your crypto investments. Let’s immerse.
Kraken’s Security Track Record: Historical Context
Understanding where Kraken stands today means looking at where it’s been. Since launching over a decade ago, the exchange has built its brand around security, a deliberate choice in an industry plagued by high-profile hacks and collapses.
For years, Kraken operated without a major breach, setting it apart from many rivals. Unlike exchanges that seemed to stumble from one incident to another, Kraken’s infrastructure held firm through wave after wave of attempted attacks. That clean record wasn’t luck: it reflected deliberate design choices, continuous monitoring, and a company culture that prioritised protecting user funds above all else.
But that streak came to an end in 2024.
Past Security Incidents and Resolutions
In 2024, Kraken faced its first significant security incident. Following a platform update, a vulnerability was introduced that allowed attackers to exploit the system. The result? Approximately $3 million in cryptocurrency was stolen before the flaw was identified and patched.
To Kraken’s credit, the response was swift. The engineering team identified the vulnerability within hours, closed the security gap, and notified affected users. Transparency reports were published, and the company reinforced its monitoring protocols to catch similar issues faster. But, the stolen funds were not recovered, which left a sour taste for some users.
This incident marked a turning point. It shattered the myth of invincibility but also demonstrated Kraken’s ability to respond decisively under pressure. Since then, no further breaches have occurred, and the lessons learned from 2024 have been folded into the platform’s ongoing security enhancements.
Compared to the scale of losses seen elsewhere in the crypto world, Mt. Gox’s $450 million, Coincheck’s $530 million, or even smaller but more frequent incidents at other exchanges, Kraken’s single breach remains relatively contained. Still, it’s a reminder that vigilance must be constant.
Industry Standing and Reputation
Even though the 2024 breach, Kraken retains a strong reputation within the crypto community. Security analysts and industry insiders continue to rank it as one of the safest exchanges available, often placing it ahead of heavyweights like Binance and Coinbase.
Why? Because track records matter, and one incident doesn’t erase years of diligent security practices. Kraken’s willingness to undergo regular third-party audits, maintain transparent proof-of-reserves reports, and invest heavily in infrastructure sets it apart. It’s not just about avoiding breaches, it’s about building systems that can withstand evolving threats and respond intelligently when issues arise.
In user surveys and trust rankings, Kraken consistently scores high marks for security transparency and regulatory compliance. That trust hasn’t evaporated: if anything, the way the company handled the 2024 breach reinforced confidence in its crisis management capabilities.
Current Security Infrastructure in 2025
Let’s get into the nuts and bolts of what actually keeps your funds safe on Kraken today. Security infrastructure isn’t just about building high walls, it’s about layering defences so that even if one fails, others hold firm.
Encryption and Data Protection Measures
Kraken employs hardware-level encryption for all wallet systems and sensitive user data. This means encryption isn’t just software-based: it’s baked into the physical hardware that stores your information. If someone were to physically access Kraken’s servers, already a nearly impossible feat, they’d still hit a wall of encryption that renders the data useless without the correct decryption keys.
All data transmissions between your device and Kraken’s servers are encrypted using industry-standard TLS protocols. User credentials, transaction details, and personal information are never transmitted in plain text. Also, Kraken has implemented end-to-end encryption for internal communications between its systems, reducing the risk of interception or tampering.
In 2025, Kraken also introduced advanced encryption protocols specifically designed to counter quantum computing threats, a forward-looking measure as quantum technology advances. Whilst quantum-resistant encryption isn’t yet industry standard, Kraken’s proactive approach signals its commitment to staying ahead of emerging risks.
Cold Storage and Asset Security
Here’s where Kraken really shines: over 97% of user assets are held in cold storage. Cold wallets are entirely offline, air-gapped from the internet and hence immune to remote hacking attempts. These wallets are geographically dispersed across multiple secure locations, so even a catastrophic event at one site wouldn’t compromise the entire reserve.
Only a small fraction of funds, enough to help daily trading and withdrawals, are kept in hot wallets connected to the internet. This minimises exposure whilst ensuring the platform remains liquid and responsive to user needs.
Cold storage isn’t just about keeping wallets offline. Kraken’s cold wallets are stored in highly secure facilities with physical security measures including 24/7 surveillance, biometric access controls, and armed guards. Access to these facilities is tightly restricted, with only a handful of authorised personnel able to enter under strict protocols.
Multi-Signature Technology Implementation
Moving funds out of cold storage isn’t a one-person job at Kraken. The exchange uses multi-signature (multi-sig) technology, which requires multiple authorised parties to sign off on any transaction before it’s executed.
This dramatically reduces insider risk. Even if a single employee’s credentials were compromised, they couldn’t unilaterally move funds. It takes several keys, held by different individuals in different locations, to unlock the vault. This redundancy ensures that collusion or coercion would need to affect multiple people simultaneously, a near-impossible scenario given Kraken’s internal security protocols.
Multi-sig isn’t just about preventing theft: it’s also a safeguard against human error. Before any large movement of assets, multiple reviewers verify the transaction details, reducing the chance of costly mistakes.
Account Protection Features for Users
Platform-level security is only half the equation. Your account security depends just as much on the tools you use and the habits you adopt. Fortunately, Kraken provides a robust suite of features to help you lock down your account.
Two-Factor Authentication Options
Two-factor authentication (2FA) is mandatory on Kraken for any sensitive account actions, withdrawals, changes to security settings, and API access all require 2FA verification. You can’t opt out, which might feel restrictive but is actually a blessing in disguise.
Kraken supports multiple 2FA methods, including app-based authentication (via Google Authenticator, Authy, or similar apps) and hardware security keys like YubiKey. SMS-based 2FA is available but not recommended due to SIM-swapping vulnerabilities.
Hardware keys are the gold standard. They’re physical devices that must be present to authenticate, making remote attacks virtually impossible. If you’re serious about security, pairing your Kraken account with a YubiKey is one of the best moves you can make.
In 2025, Kraken also rolled out biometric authentication options. You can now use fingerprint or facial recognition for login and withdrawal verification on supported devices. This adds another layer of convenience without sacrificing security, as biometric data is stored locally on your device, not on Kraken’s servers.
Withdrawal Allowlists and Security Settings
One of Kraken’s most powerful, and underutilised, features is the withdrawal allowlist. Once enabled, you can only withdraw funds to cryptocurrency addresses you’ve pre-approved. Any attempt to send funds to a new address is blocked unless you manually add it to the allowlist and wait through a security delay period.
This feature is a lifesaver if your account is ever compromised. Even if an attacker gains access, they can’t send your funds to their own wallet without first adding it to your allowlist, and that action triggers alerts and waiting periods, giving you time to respond.
You can also set up email and SMS notifications for account activity. Every login, withdrawal, and security change triggers an alert. If you see something you didn’t initiate, you can freeze your account instantly through Kraken’s support channels.
Master Key and Global Settings Lock
Kraken’s Master Key is an additional password used exclusively for the most sensitive actions, changing your main password, modifying 2FA settings, or disabling the Global Settings Lock. It’s a second line of defence that ensures even if someone gets hold of your primary credentials, they can’t alter your security setup without the Master Key.
The Global Settings Lock is a toggle that, when activated, prevents any changes to your account security settings for a set period (typically 72 hours). This means if an attacker somehow bypasses your 2FA and tries to disable security features, they hit a wall. The lock can only be lifted after the waiting period, during which you’d receive multiple alerts and have ample opportunity to intervene.
These features might seem like overkill, but in the high-stakes world of cryptocurrency, redundancy saves fortunes.
Regulatory Compliance and Licensing
Regulation might not sound exciting, but it’s one of the clearest indicators of an exchange’s legitimacy and commitment to operating above board. Kraken doesn’t just meet minimum compliance standards, it actively pursues licensing and regulatory approval in multiple jurisdictions.
Global Regulatory Licences Held
Kraken is licensed and regulated in some of the world’s most stringent markets, including the United States, United Kingdom, European Union, Canada, Japan, and Australia. Each of these jurisdictions has its own rigorous requirements around financial security, consumer protection, and operational transparency.
In the US, Kraken made history by becoming the first cryptocurrency company to receive a Wyoming Special Purpose Depository Institution (SPDI) banking charter. This charter allows Kraken to operate as a regulated bank, subject to the same oversight and capital requirements as traditional financial institutions. It’s a significant milestone that underscores the company’s commitment to playing by the rules.
In Europe, Kraken holds a Virtual Asset Service Provider (VASP) licence and complies with MiCA (Markets in Crypto-Assets) regulations, which came into full effect in 2024. These regulations impose strict standards on how exchanges handle customer funds, manage risk, and report activities to authorities.
Regulatory compliance isn’t just a box-ticking exercise. It means Kraken is subject to regular inspections, audits, and reporting requirements. Regulators can, and do, step in if something looks amiss. This external oversight adds an extra layer of accountability that purely unregulated exchanges simply don’t have.
KYC and AML Compliance Standards
Kraken enforces robust Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols. When you sign up, you’re required to verify your identity with government-issued ID and proof of address. Higher account tiers, those allowing larger deposits and withdrawals, require additional documentation and verification steps.
Some users find KYC requirements intrusive, but they serve a critical purpose. They deter bad actors, prevent money laundering, and help ensure that stolen funds can be traced and potentially recovered. They also protect Kraken from regulatory penalties and reputational damage.
Kraken’s AML systems monitor transactions in real time, flagging suspicious activity for further review. If something looks off, unusual withdrawal patterns, transfers to known risky addresses, or activity inconsistent with your profile, Kraken’s compliance team investigates. Whilst this can occasionally result in account holds or requests for additional information, it’s a necessary trade-off for operating a secure, compliant platform.
Third-Party Security Audits and Certifications
Self-certification is easy. Anyone can claim to be secure. What sets Kraken apart is its willingness to invite outside experts to poke holes in its defences, and to publish the results.
Independent Security Assessments
In 2025 alone, Kraken underwent more than 20 independent security audits conducted by globally recognised cybersecurity firms. These audits cover everything from penetration testing (attempting to break into systems) to code reviews, infrastructure assessments, and social engineering tests.
The results? Zero major flaws were identified. Minor issues and recommendations were flagged, this is normal and expected, but nothing that posed a significant risk to user funds or data. Kraken addressed these findings promptly and re-tested to confirm fixes.
Kraken also holds ISO/IEC 27001 certification, an internationally recognised standard for information security management. Achieving this certification requires demonstrating rigorous controls over how data is collected, stored, processed, and protected. It’s not a one-time achievement either: maintaining certification requires ongoing compliance and regular re-assessments.
Also, Kraken has earned SOC 2 Type I certification, which evaluates the design and implementation of security controls. This certification is particularly important for institutional clients and partners who need assurance that Kraken meets enterprise-grade security standards.
These certifications aren’t just badges to display on a website, they represent countless hours of documentation, process refinement, and third-party validation. They signal that Kraken takes security seriously at every level of the organisation.
Proof of Reserves and Transparency Initiatives
In the wake of high-profile collapses like FTX, proof of reserves has become a critical trust signal. Kraken publishes regular, independently audited proof-of-reserves reports that confirm the platform holds sufficient assets to cover all user balances.
These reports provide cryptographic proof that Kraken’s on-chain holdings match or exceed customer deposits. You can verify your own account balance is included in the Merkle tree, a mathematical structure that allows individual verification without revealing other users’ data.
Transparency initiatives go beyond reserves. Kraken also publishes detailed incident reports, security updates, and policy changes. When the 2024 breach occurred, Kraken didn’t bury the story, it published a full post-mortem detailing what went wrong, how it was fixed, and what steps were taken to prevent recurrence.
This level of openness is rare in the crypto industry, where many platforms prefer to keep incidents quiet or release vague, sanitised statements. Kraken’s transparency builds trust, even when the news isn’t perfect.
Comparing Kraken’s Security to Major Competitors
It’s one thing to say Kraken is secure. It’s another to see how it stacks up against the competition. Let’s put Kraken side by side with some of the biggest names in the industry.
How Kraken Stacks Up Against Industry Leaders
Binance, Coinbase, and Kraken are often mentioned in the same breath as the top-tier exchanges, but their security profiles differ significantly.
Binance has faced multiple security incidents over the years, including a 2019 hack that resulted in the loss of 7,000 BTC (worth over $40 million at the time). Binance covered the losses from its emergency insurance fund, but the incident raised questions about the platform’s security rigour. Binance has since improved its infrastructure, but it continues to face regulatory scrutiny in multiple jurisdictions, which can impact its operational stability.
Coinbase, based in the US and publicly traded, is heavily regulated and generally considered secure. But, it’s also been a frequent target for hackers and phishing attacks, and some users have reported unauthorised account access due to weak 2FA enforcement in the past. Coinbase’s customer support response times have been criticised, which can be a liability if you need urgent help securing a compromised account.
Kraken, by contrast, has experienced only one significant breach, the 2024 incident involving $3 million. That’s orders of magnitude smaller than the losses seen at Binance and even some smaller exchanges. Kraken’s cold storage practices are more aggressive than most competitors, with 97% of assets offline compared to industry averages closer to 90%.
Kraken’s audit frequency and transparency also exceed most rivals. Whilst Coinbase publishes periodic security updates, Kraken’s commitment to over 20 independent audits annually is unmatched. Binance has been less transparent about third-party audits, particularly in recent years.
In terms of regulatory compliance, Kraken’s Wyoming banking charter and extensive global licensing give it an edge. Binance has struggled with regulatory clarity, facing bans or restrictions in several markets. Coinbase is well-regulated in the US but has a narrower international footprint.
No exchange is perfect, but when you weigh track records, transparency, cold storage policies, and regulatory standing, Kraken consistently ranks at or near the top.
Recent Security Developments in 2024-2025
Security isn’t static. Threats evolve, and so must defences. Kraken has rolled out several notable upgrades and initiatives over the past year, responding both to the 2024 breach and to emerging threats in the broader crypto ecosystem.
New Security Features and Upgrades
One of the standout additions in 2025 is biometric authentication. You can now use fingerprint or facial recognition for login and withdrawal approvals on supported devices. This makes account access more convenient without sacrificing security, as biometric data is stored locally on your device rather than on Kraken’s servers.
Kraken also introduced hardware-level wallet encryption in 2025, further hardening its cold storage infrastructure. This means that even physical access to storage devices wouldn’t yield usable data without the corresponding decryption keys, which are stored separately and protected by multi-signature protocols.
Another significant upgrade is the implementation of quantum-resistant encryption algorithms. Whilst quantum computing isn’t yet a practical threat to current encryption standards, Kraken is future-proofing its systems by adopting post-quantum cryptography. This forward-thinking approach ensures that even as computational power increases, user data remains secure.
Kraken’s real-time threat detection system was also enhanced. Machine learning algorithms now monitor account activity and transaction patterns, flagging anomalies instantly. If unusual behaviour is detected, say, a login from an unfamiliar location followed by an immediate withdrawal attempt, the system can automatically freeze the account and notify the user before any damage is done.
Response to Emerging Threats
The 2024 breach was a wake-up call, and Kraken responded by overhauling its internal security protocols. The vulnerability that allowed the breach was related to a platform update, a reminder that even routine maintenance can introduce risk. In response, Kraken implemented a more rigorous code review and testing process, including automated security scans and staged rollouts that catch issues before they reach production.
Kraken also expanded its anti-fraud team, which operates around the clock monitoring for suspicious activity. This team works closely with law enforcement and other exchanges to track stolen funds and prevent money laundering.
Regular penetration testing, both by internal red teams and external experts, has been intensified. These tests simulate real-world attacks to identify weak points before malicious actors can exploit them. Findings are addressed immediately, and the platform is re-tested to confirm fixes.
Kraken’s bug bounty programme, which rewards security researchers for identifying vulnerabilities, has also been expanded. Higher payouts and clearer guidelines encourage more researchers to scrutinise the platform, turning potential adversaries into allies.
Potential Security Concerns and Limitations
No platform is invincible, and it’s important to approach any exchange with eyes wide open. Let’s address the elephant in the room: what are Kraken’s weaknesses, and what should you be aware of?
Known Vulnerabilities or Weak Points
The 2024 breach was a stark reminder that even well-secured platforms can be compromised. The vulnerability was introduced during a platform update, a moment when systems are particularly fragile. Whilst Kraken’s response was swift and the issue was patched, the fact that it happened at all shows that human error and software complexity remain persistent risks.
Centralised exchanges, by their nature, are single points of failure. No matter how robust Kraken’s security, it’s still a custodial platform, you don’t control the private keys to your funds. If Kraken were to suffer a catastrophic breach, regulatory seizure, or insolvency, your assets could be at risk. This is true of any exchange, not just Kraken, but it’s a reality you need to accept if you’re keeping funds on the platform.
Another limitation is that whilst Kraken’s security is strong, it can’t protect you from social engineering attacks. If someone tricks you into revealing your password or 2FA codes, no amount of platform security will save you. Phishing schemes targeting Kraken users are common, and it’s up to you to stay vigilant.
Finally, Kraken’s security features are only as good as your willingness to use them. If you don’t enable 2FA, don’t use a withdrawal allowlist, and use a weak password, you’re leaving the door wide open regardless of how secure the platform itself is.
User Responsibility and Best Practices
Your security starts with you. Here’s what you need to do to maximise your account protection:
- Use a strong, unique password: Don’t reuse passwords from other sites. Use a password manager to generate and store complex passwords.
- Enable hardware-based 2FA: If possible, use a YubiKey or similar hardware security key. App-based 2FA is a solid second choice. Avoid SMS 2FA.
- Set up a withdrawal allowlist: Pre-approve only the addresses you trust, and enable the security delay.
- Activate the Global Settings Lock: This prevents unauthorised changes to your security settings.
- Enable all account alerts: Get notified of every login, withdrawal, and security change.
- Don’t keep large balances on exchanges: If you’re holding crypto long-term, move it to a self-custody wallet where you control the private keys.
- Stay alert for phishing: Kraken will never ask for your password or 2FA codes via email or phone. Always navigate directly to Kraken’s official site rather than clicking links in emails.
Kraken provides the tools: it’s up to you to use them. Treat your account like a bank vault, because that’s exactly what it is.
Conclusion
So, is Kraken still safe in 2025? The answer is a confident yes, with caveats.
Kraken remains one of the most secure and transparent cryptocurrency exchanges operating today. Its track record, whilst not entirely unblemished after the 2024 breach, is still exceptional compared to the industry at large. The platform’s commitment to cold storage, multi-signature technology, third-party audits, and regulatory compliance sets a high bar that few competitors meet.
The 2024 incident was a sobering reminder that no system is infallible, but Kraken’s rapid response, transparency, and subsequent security upgrades demonstrate a mature approach to crisis management. Rather than undermining trust, the way Kraken handled the breach arguably reinforced it.
That said, you’re not absolved of responsibility. Kraken provides robust tools and infrastructure, but your account security eventually depends on your own practices. Enable every security feature available, stay alert for phishing, and don’t keep more on the exchange than you’re comfortable risking.
If you’re looking for a well-regulated, security-focused exchange with a proven track record and a commitment to continuous improvement, Kraken is an excellent choice in 2025. Just remember: in the world of cryptocurrency, vigilance is your best asset.
