We are committed to providing greater flexibility and management for traders and are excited to announce a significant expansion of Kraken Pro Traders’ collateral opportunities.
What is collateral currency?
Collateral currency is fiat, crypto, or stupid that can be used to trade on margins. Unlike standard spot trading, margin trading allows you to open up long or short positions by borrowing funds directly from Kraken.
When trading on margins, Kraken’s margin pool is used to buy or sell cryptocurrency, but collateral ensures an extension of the margin. The collateral currency you use does not need to match the trading pairs in your order book you are trading, and you can have more flexibility to be longer or shorter with margin-enabled trading pairs.
Note: Both staked unstaked and kraken compensation assets can be used as collateral for margins. However, assets held in Kraken Pro on-chain staking are not eligible to be used as collateral for margins.
Maximize the benefits of margin trading
Expanding the range of collateral currency can give you strengths Traders in several ways:
Tax benefits
In some jurisdictions, using digital assets as collateral rather than selling them entirely will allow taxable events to be postponed. By leveraging collateral currency for margin trading, traders may reduce their immediate tax liability while maintaining exposure to shares they own.
Diversification of collateral
Using multiple collateral currencies allows you to better manage the risk of a single asset and reduce exposure to volatility. This is especially valuable for traders looking to protect their position in unpredictable markets.
Improved fluidity
More assets are eligible as collateral, allowing you to free up funds for other trading opportunities while maintaining a robust position in the margin. This ensures that your portfolio is aggressive and will respond to market changes.
Strategic Flexibility
The ability to combine assets with a variety of haircuts allows for a tweaked margin strategy tailored to risk tolerance and market outlook. Whether you prefer conservative or aggressive trading, the expanded collateral options provide the necessary adaptability.
Hedging and short selling opportunities
Access to margin trading and a range of collateral currencies allows traders to hedge existing positions and take advantage of downward market movements through short-term sales. This opens up opportunities for profit, regardless of the market direction.
Leverage and capital efficiency
Margin trading can amplify purchasing power and take a greater position than available capital. This capital efficiency is further enhanced by the ability to use a wider range of collateral currency, allowing you to maximize potential returns while optimizing resource allocation.
New collateral currency
This is a list of eight new assets added to Kraken’s margin collateral lineup, bringing the total to an option of 52.
| assets | Haircut |
| SPX6900 (SPX) | 20% |
| Algorand (something) | 10% |
| ondo (ondo) | 10% |
| fartcoin (fartcoin) | 20% |
| Artificial Supervisor Alliance (FET) | 10% |
| uniswap (uni) | 10% |
| Curve Dao Token (CRV) | 10% |
| Esena (Ena) | 10% |
Understanding haircuts
When using currency as collateral, Kraken applies a “haircut” to determine its effective value. This haircut reflects the rate of reduction applied to the value of the asset to explain the potential price volatility.
For example, if you have a 20% haircut and have assets worth $1,000, the collateral value is calculated at $800. This approach improves stability and reduces the risks associated with using volatile assets as margin collateral.
What should you keep in mind?
It is important to note that the collateral assets used to open margin positions cannot be exchanged for other currencies or withdrawn while the position is open. These assets remain reserved as collateral and appear to be account balances, but are restricted from transactions or withdrawals.
You can check the availability of your collateral assets at any time via the Funding tab of your Kraken account.
Ready to trade, but don’t have a Kraken account yet? Sign up for Kraken Pro today!
Margin trading services availability is covered by this Specific limits and eligibility criteria. Transactions using margins include factors of risk and may not be suitable for everyone. read Kraken’s Margin Disclosure Statement For more information.
Investment services, subsidized services and investment activities (“Services”) related to derivatives in the European Economic Area are provided and implemented by Payward Europe Digital Solutions (CY) Limited. (“PEDSL-CY”). PEDSL-CY has been approved and approved by the Cyprus Securities and Exchange Commission (CYSEC) under license number 342/17. PEDSL-CY has registered the Cyprus registration number HE 356603. Learn about risks by reading the risk disclosure statement.
For other markets except the US, Payward Digital Solutions Ltd. has been licensed by the Bermuda Monetary Authority to carry out its digital asset business. For more information, please read Kraken Derivatives’ risk disclosure.
Transaction derivatives and other financial instruments, including revalled financial instruments, contain significant risks and are not suitable for all investors. You could lose more than your initial investment.
