Kraken continues to expand its margin trading capabilities with the addition of 15 new collateral currencies, significantly increasing flexibility for active traders. This enhancement raises the total number of supported margin collateral options from 23 to 38, empowering users with more choices to optimize their trading strategies.
This update reflects Kraken’s ongoing commitment to delivering advanced tools and broader asset access, enabling traders to better manage risk, improve capital efficiency, and respond dynamically to market movements.
What Is a Collateral Currency?
A collateral currency is a digital asset or fiat currency that you can use to secure a borrowed position when trading on margin. Unlike spot trading—where you trade only with available funds—margin trading allows you to borrow funds from Kraken’s margin pool to open leveraged long or short positions.
When you initiate a margin trade, your chosen collateral backs the borrowed amount. Importantly, the collateral doesn’t need to match the base or quote currency of the trading pair you're trading. For example, you can use XRP as collateral to short ETH/USD, offering greater strategic versatility across all margin-enabled trading pairs.
👉 Discover how margin trading can amplify your market opportunities today.
Both unstaked assets and those earning rewards through Kraken Rewards programs are eligible for use as margin collateral. However, assets currently staked via Kraken Pro on-chain staking cannot be used until they are unstaked and fully available in your account.
Benefits of Expanded Collateral Options
The introduction of 15 new collateral currencies unlocks several strategic advantages for traders:
Diversify Risk Across Multiple Assets
By supporting more collateral types, Kraken enables traders to spread their exposure across various cryptocurrencies. This diversification helps mitigate risks associated with volatility in any single asset—especially crucial during uncertain market conditions.
Increase Liquidity Without Selling Holdings
Traders can now use a wider range of assets as collateral without having to sell them outright. This preserves portfolio composition while freeing up capital for new trades, enhancing overall liquidity and responsiveness.
Customize Margin Strategies Based on Haircuts
Each collateral currency carries a specific haircut, which determines its effective value when used for margin. With varied haircut levels, traders can mix and match assets based on their risk appetite—using low-haircut assets for stability or higher-volatility ones for aggressive plays.
Unlock Hedging and Short-Selling Opportunities
A broader set of collateral options makes it easier to hedge existing long positions or profit from downward price trends through short selling. This flexibility supports both defensive and offensive strategies regardless of market direction.
Maximize Leverage and Capital Efficiency
Using multiple collateral types improves capital efficiency by allowing traders to fully utilize underused assets. Combined with leverage, this enables larger positions without additional cash outlay—potentially increasing returns on successful trades.
Potential Tax Advantages
In certain jurisdictions, using crypto as collateral instead of selling it may defer taxable events. This feature offers a strategic benefit for users aiming to maintain exposure while minimizing immediate tax liabilities.
Newly Added Collateral Currencies
Kraken has introduced 15 new assets to its margin collateral lineup, bringing the total to 38 supported currencies. Below is the complete list of newly supported assets along with their respective haircuts:
- AAVE – 20% haircut
- DOGE – 20% haircut
- FTM – 30% haircut
- NEAR – 30% haircut
- PAXG – 5% haircut (one of the lowest available)
- PEPE – 30% haircut
- RENDER – 30% haircut
- RUNE – 30% haircut
- SHIB – 30% haircut
- STX – 30% haircut
- SUI – 30% haircut
- TAO – 30% haircut
- WIF – 30% haircut
- XLM – 10% haircut
- XRP – 10% haircut
Additionally, Kraken has reduced the haircut for AVAX, XTZ, and TRX from 50% to 30%, making these established assets significantly more efficient as margin collateral.
👉 See how diversified collateral can boost your trading performance.
Understanding Haircuts in Margin Trading
A haircut is a risk management mechanism applied to collateral assets. It represents the percentage deducted from an asset’s market value to account for potential price fluctuations.
For instance:
If you deposit $1,000 worth of **DOGE** (with a 20% haircut), its effective collateral value will be $800.
This buffer protects both the trader and the exchange in volatile markets, reducing the likelihood of forced liquidations due to sudden price swings. Lower haircuts (like PAXG at 5%) indicate higher confidence in an asset’s stability, while higher haircuts reflect greater perceived volatility.
Key Considerations When Using Margin Collateral
While expanded options offer greater flexibility, there are important limitations to keep in mind:
- Locked Assets: Any collateral used to open a margin position cannot be withdrawn or exchanged until the position is closed.
- Real-Time Monitoring: You can view your available and reserved balances under the Funding section of your Kraken account.
- Eligibility Requirements: Not all users may qualify for margin trading. Eligibility depends on jurisdiction, account status, and compliance with platform policies.
Margin trading involves significant risk and may not be suitable for all investors. It is essential to understand the mechanics and potential downsides before engaging in leveraged trading.
👉 Learn how professional traders manage leverage and risk effectively.
Frequently Asked Questions (FAQ)
Q: Can I use staked assets as margin collateral on Kraken?
A: No. Assets held in Kraken Pro on-chain staking are not eligible for use as margin collateral until they are unstaked and fully available in your wallet.
Q: How does a haircut affect my buying power?
A: A haircut reduces the value of your collateral. For example, a 30% haircut means only 70% of your asset’s value counts toward margin requirements, directly impacting how much you can borrow.
Q: Why did Kraken add meme coins like DOGE, SHIB, and PEPE as collateral?
A: Due to strong user demand and high liquidity, these assets are widely held. Including them allows traders to leverage popular holdings without selling, supporting more flexible strategies.
Q: Does using more collateral currencies increase my risk?
A: Not inherently—but poor diversification or over-leveraging can amplify risk. Always assess volatility, haircuts, and market conditions before opening leveraged positions.
Q: Are stablecoins still among the best choices for margin collateral?
A: Yes. Stablecoins like USDT or USDC typically carry low haircuts due to minimal price volatility, making them highly efficient and reliable for securing margin positions.
Q: Can I switch between different collateral currencies within an open position?
A: No. Once a position is opened, the collateral is locked. You can adjust or add collateral only under specific margin maintenance scenarios or by closing and reopening the position.
Margin trading involves risk. There is no guarantee that orders will execute at desired prices, and market volatility can lead to liquidation. These materials are for informational purposes only and do not constitute financial advice. Users should conduct independent research and consult tax or financial professionals where applicable.