Kraken vs. eToro: Which Is Right for You? | The Motley Fool (2024)

Kraken's fees are relatively high if you're planning on using a card. You will be charged 3.75% of your deposit in processing fees, plus $0.25. There is also a 0.9% fee for stablecoins and 1.5% for any other crypto or FX pair. In total, you could be looking at up to 5% in fees alone. That is quite a bit.

If you upgrade to Kraken Pro, however, fees are much more reasonable. Kraken uses a maker/taker fee schedule incentivized by lower fees for higher volume trades.

eToro keeps the fee structure simple for users with a standard fee of 1% for buying or selling crypto. This is not only easier for the user, but it's also a much better price than Kraken's 3.75%.

As an example, here's how this breaks down if you're buying $100 worth of Bitcoin (BTC) on eToro. In that case, the 1% fee would be $1, making your total $101. Now, 1% is certainly a fair fee, but if you're going to trade in high volume amounts, the 1% can add up. If that's the case it may be worth looking into Kraken Pro, where the fee percentage goes down as the trade volume goes up. But with standard Kraken fees, $100 worth of BTC would cost you 3.75% plus $0.25 for a total of $104, a bit higher compared to the $101 at eToro for the same amount of Bitcoin.

Kraken has been around for basically an eternity in Crypto years, and it offers over 160 coins and tokens, including Bitcoin, Ethereum (ETH), Cardano (ADA), Solana (SOL), and Dogecoin (DOGE), as well as many lesser know coins. It also offers staking for many of these big coins.

eToro's focus is more on the mainstream coins, offering Bitcoin, Ethereum, and Chainlink (LINK), among others. But eToro has a smaller selection than Kraken, with around 24 coins. One notable coin eToro does not offer is Tether (USDT). However, although the crypto selection may seem rather slim, you can also trade stocks on eToro. So, for the investor looking to do traditional assets as well as some mainstream cryptocurrencies, this could be an appealing option.

Kraken's focus is on being a crypto exchange rather than a wallet service. Users can deposit funds into the corporate wallet for safekeeping while their funds are being bought, sold, or used for staking. But it does not supply users with a personal Kraken wallet.

When funds are deposited, they are moved to cold storage and hot wallets, typical for crypto exchanges. When funds are withdrawn, that transaction is handled by the hot wallet rather than the deposit address, so the sending address for withdrawals on Kraken is different than the deposit address.

Kraken does recommend and support popular hardware wallets Trezor and Ledger.

eToro, however, does have its own wallet: the eToro Money crypto wallet, which lets users transfer their funds to another external wallet. There is not as much freedom to exchange with eToro's wallet. But if you find all the coins you want to trade in on eToro and feel good about storing your coins in hot storage while using the platform, eToro's wallet will work and has the benefit of being made by the exchange company, so they work seamlessly together.

One of the most important features investors look for in an exchange is security. Both of these exchanges are generally considered secure, but Kraken may have a leg up.

Kraken has standard two-factor authentication. But it also has several other remarkable security features such as a global settings time lock, configurable account timeout, and SSL encryption. Not only that, but it has what Kraken calls "safe-coin storage." Kraken claims this means 95% of all deposits are kept in offline, airgapped, and geographically distributed cold storage. It maintains full reserves so users can always withdraw immediately on demand. Kraken also keeps its servers in secure cages with 24/7 surveillance, armed guards, and video monitors. Sensitive information is encrypted, and all accounts are strictly monitored. When it comes to security, Kraken is one of the strongest exchanges we've found.

eToro's security features are not as advanced as Kraken. Most coins stored on eToro are kept in cold storage. Some, however, are kept in hot storage to maintain liquidity. This does make them more vulnerable to potential hacks. It is unclear whether eToro provides insurance for cryptocurrencies on its platform. But it does provide coverage for U.S. customers in the unfortunate incident of loss of cash funds, up to $250,000. But storing your crypto in your own personal hardware wallet while it's not being actively traded is always recommended.

Kraken is a strong exchange for those looking for a variety of coins and excellent security features. Kraken is also highly licensed and regulated, so if you care about investing on a fully regulated exchange this may be the one for you. But keep in mind that this peace of mind comes at a rather high cost in transaction fees if you're not using Kraken Pro.

If you want to focus on a few mainstream coins, eToro might be the exchange you're looking for. With its own in-house wallet, eToro takes care of the storage work for you, and it also includes the option of a social trading feature where you can copy the trades of other, more knowledgeable users. So, if you're looking to go deep in a few coins, eToro provides a great place to do so.

If you are not convinced about either of these and want to see more options, check out our list of best cryptocurrency exchanges and apps to find one that suits your needs.