Is Kraken safe? Licences, proof of reserves and what isn't protected

The short answer

Kraken is one of the better-regulated crypto exchanges available to UK and EU residents, and nothing in its public record suggests a hack that cost clients their crypto. In the UK it is registered with the FCA as a cryptoasset business (FRN 928768), in the EU it holds a MiCA licence from the Central Bank of Ireland, granted in June 2025, and its latest proof-of-reserves review (snapshot 30 June 2026) showed reserves above 100% for the assets covered.

What it does not have is a safety net. Crypto held on Kraken is not covered by the FSCS in the UK, and MiCA has no compensation scheme. Kraken being “safe” means a well-run custodian, not a protected deposit.

Who regulates Kraken?

Kraken is the trading name of Payward, Inc., a US company founded in 2011, and like most large exchanges it serves different countries through different subsidiaries. The entity in your account agreement decides what rules apply. According to Kraken’s legal disclosures and its “how Kraken is regulated” page (both checked October 2026):

In the US, Kraken says it holds money transmitter licences in 46 jurisdictions and does not serve residents of New York or Maine. That matters to UK and EU readers only as background: the US entities are not the ones holding your account.

Check the UK registration yourself by searching the FCA register for 928768, and for EU accounts look up Payward Europe Solutions Limited on the Central Bank of Ireland’s register. The French AMF’s list of authorised crypto providers also shows it operating in France under its Irish MiCA licence.

What does FCA registration actually mean?

Less than the word “regulated” suggests. Payward Limited’s registration is under the Money Laundering Regulations, which means the FCA has checked that Kraken’s anti-money-laundering controls and the people running the UK business are fit. It does not mean the FCA supervises how Kraken treats customers, how much capital it holds or how it looks after your coins, in the way it does for a share broker.

Kraken’s UK disclosures say it directly: clients of its crypto services “will not be protected by the Financial Ombudsman Service or the Financial Services Compensation Scheme”, because most cryptoassets are not specified investments under the Financial Services and Markets Act. The same page says e-money in a Kraken account “is not covered by the Financial Services Compensation Scheme”. E-money institutions must safeguard client money, keeping it apart from their own, but there is no £85,000 backstop if that fails.

That will change, though not yet. The FCA published final rules for a full UK cryptoasset regime on 30 June 2026, under the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, and the regime is due to start on 25 October 2027. Firms like Kraken will then need full FCA authorisation to keep serving UK clients. Until then, the MLR registration is the standard.

What protections do UK customers get today?

The main ones come from the FCA’s financial promotion rules for crypto, in force since 8 October 2023, which apply to Kraken as to every crypto firm marketing to UK consumers:

• A 24-hour cooling-off period. First-time customers of a firm must wait at least 24 hours and then reconfirm before they can act on a direct offer to invest. It applies firm by firm, so it applies even if you already hold crypto elsewhere.
• An appropriateness assessment. Kraken must test whether you understand the risks before letting you buy. If you fail, the firm must wait 24 hours before reassessing you and cannot coach you through the answers.
• Risk warnings. Promotions must carry the FCA’s prescribed warning that you should be prepared to lose all the money you invest.
• No joining incentives. Refer-a-friend and new-joiner bonuses are banned for UK crypto promotions, which is why Kraken’s UK sign-up has no welcome bonus.

These rules shape how you are sold crypto. They do nothing if the exchange fails.

What about EU customers and MiCA?

Kraken announced its MiCA licence from the Central Bank of Ireland on 25 June 2025, and its regulatory page says it now holds two Irish MiCA authorisations, through Payward Europe Solutions Limited and Payward Global Solutions Limited. Before that, Kraken’s Irish company had been registered as a virtual asset service provider since 2023, which, like the UK registration, was an anti-money-laundering status only.

MiCA is a real conduct regime. It requires authorised firms to keep client crypto segregated from their own assets, to meet capital and governance rules and to handle complaints properly. In that sense an EU Kraken customer has stronger rules today than a UK one. But MiCA has no compensation scheme. The Cyprus Investor Compensation Fund covers investment services from CySEC-licensed firms, which can include Kraken’s Cypriot derivatives entity, but it does not cover spot crypto held under MiCA.

What do Kraken’s proof-of-reserves reviews show?

Kraken was one of the first exchanges to publish proof of reserves, starting in 2014. The current version works like this, according to Kraken’s proof-of-reserves page: an independent accountant takes an anonymised snapshot of all client balances, checks that Kraken controls on-chain wallets holding at least that much, and builds a Merkle tree so each client can verify their own balance was included.

The latest review uses a snapshot from 30 June 2026. Kraken’s published reserve ratios (as shown in October 2026) were:

Two cautions. First, these are reviews of specific assets on a specific day, not a full audit of Kraken’s finances, and the page does not name the accountant. Its own FAQ even lists a narrower set of assets in scope than the ratio table. Kraken says it runs reviews twice a year, so for much of the year the latest figure is several months old. Second, Kraken lists the method’s limits itself: a review cannot prove exclusive ownership of keys, cannot detect hidden liabilities or assets borrowed to pass the test, and cannot rule out losses since the snapshot. It shows assets exist. It cannot show nothing is owed against them.

Has Kraken ever been hacked?

Kraken’s regulatory page claims its custody wallets “have never been breached” since it was founded in 2011. We found no public record contradicting that: no incident in which attackers took client crypto from Kraken’s wallets. Given how many exchanges have lost client funds in the same period, that is a genuinely strong record. It is still Kraken’s own claim about its own systems rather than an independently audited finding.

The record is not spotless, and the incidents are worth knowing:

• June 2024, treasury bug. A flaw in a new deposit feature let users credit balances before deposits had cleared. Kraken’s chief security officer said about $3 million was withdrawn from Kraken’s own treasury wallets, not client accounts, by researchers at the security firm CertiK. The bug was fixed within hours and the money was returned, as reported by The Block and Cointelegraph. Kraken and CertiK publicly disputed who acted in good faith.
• 2025–2026, insider data access. On 13 April 2026 Kraken disclosed that two customer support employees, one found in February 2025 and one in early 2026, had been recruited by criminals and had improperly viewed client data. Kraken said around 2,000 accounts were potentially viewed, its systems were not breached and client funds were not at risk, and that it refused to pay an extortion demand. Affected clients were notified.

The second incident matters even though no money was lost. Leaked names and contact details are what phishing and “fake Kraken support” scams are built on. The protection is on your side: a hardware security key for login, withdrawal address allowlisting and Kraken’s global settings lock.

On cold storage, many third-party reviews say Kraken keeps about 95% of client crypto offline. We could not find that figure on Kraken’s own current pages, so we do not rely on it. Keeping most assets offline is standard practice for large exchanges, but the proof-of-reserves review, not a storage percentage, is the evidence that matters.

What happened with the SEC?

Two US cases, now both closed:

• February 2023: $30 million staking settlement. The SEC charged that Kraken’s US staking-as-a-service programme, which advertised returns of up to 21% a year, was an unregistered securities offering. Kraken agreed to pay $30 million in disgorgement, interest and penalties and to stop offering that programme to US clients, according to the SEC’s litigation release. Non-US clients were not affected.
• November 2023 to March 2025: the exchange lawsuit. The SEC sued Payward, Inc. and Payward Ventures, alleging Kraken operated as an unregistered exchange, broker and clearing agency. A federal judge refused Kraken’s motion to dismiss in August 2024, but on 27 March 2025 the SEC filed a joint stipulation dismissing the case with prejudice, according to its litigation release. The SEC said the dismissal reflected its change of approach to crypto, not a view on the merits. Kraken paid nothing and admitted nothing.

Neither case alleged that client assets were missing or misused. Both were about whether US securities law applied to Kraken’s products.

What is not protected?

• Your crypto, if Kraken fails. No FSCS, no Financial Ombudsman for crypto complaints, no MiCA compensation scheme. You would rely on segregation and the insolvency process.
• Cash balances, which are safeguarded e-money, not FSCS-covered deposits.
• Market losses. Crypto can fall sharply and no scheme pays for that.
• Losses from your own account security. If someone phishes your login and withdraws, that is very hard to recover from anywhere.
• Staking and other yield products, which carry their own lock-up and protocol risks on top of the exchange risk.

The practical response is the one that applies to any exchange: keep on Kraken what you are about to trade, and move longer-term holdings to a wallet you control.

What does Kraken cost?

Briefly, because safety is the question here. On Kraken Pro, spot fees start at 0.40% maker and 0.80% taker since July 2026 and fall with 30-day volume, according to Kraken’s fee schedule; the full breakdown is in Kraken fees explained. The simple Buy button in the main Kraken app costs considerably more once the spread is included. The full breakdown is in our Kraken review.

Verdict

Kraken is about as safe as a crypto exchange gets for UK and EU residents: registered with the FCA, MiCA-licensed in Ireland, publishing reserve checks above 100%, with no known loss of client crypto in fifteen years and both SEC cases closed. Our trust score of 9.5 reflects that. The limits are structural rather than specific to Kraken. UK registration is an anti-money-laundering status, not a licence with compensation behind it, proof of reserves is a periodic snapshot, and the 2026 insider incident shows customer data can leak even when systems hold.

If you are comparing on safety and price, see Binance vs Kraken, Kraken vs OKX and Kraken vs Bybit, or the full ranking of the best crypto exchanges. If you would rather have FSCS cover and invest in regulated products instead, the FCA-regulated trading platforms list is where to start.

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