Kraken continues to expand its margin trading capabilities with the addition of 15 new collateral currencies, increasing the total number of supported assets from 23 to 38. This enhancement gives traders greater flexibility in managing their positions and opens up new strategic opportunities across volatile markets.
Whether you're a seasoned trader or exploring advanced strategies for the first time, this update strengthens Kraken Pro’s position as a powerful platform for leveraged trading. By broadening the range of acceptable collateral, Kraken empowers users to optimize capital efficiency, diversify risk, and maintain active trading positions without liquidating holdings.
What Is a Collateral Currency?
A collateral currency is any asset—fiat, cryptocurrency, or stablecoin—that you can use to secure a margin position on Kraken. Unlike spot trading, where you only trade with available funds, margin trading allows you to borrow capital directly from Kraken’s margin pool to open long or short positions.
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. This cross-asset functionality enhances strategic flexibility and supports more dynamic portfolio management.
👉 Discover how margin trading can amplify your strategy with flexible collateral options.
Both unstaked assets and those earning rewards through Kraken Rewards 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 unlocked.
Why Expanded Collateral Options Matter
The expansion to 38 collateral currencies isn't just about quantity—it's about empowering traders with smarter tools. Here’s how this update benefits your trading experience:
Diversified Risk Exposure
Using multiple collateral types helps spread risk across different asset classes. Instead of relying solely on one volatile cryptocurrency like Bitcoin or Ethereum, traders can now incorporate assets like AAVE, SHIB, or XLM into their margin strategy, reducing concentration risk.
Enhanced Liquidity Management
More collateral choices mean less need to sell assets outright. Traders can lock up alternative coins as collateral while keeping core holdings intact—freeing up liquidity for other opportunities without triggering tax events.
Strategic Positioning Across Market Cycles
With diverse haircuts applied to each asset (ranging from 5% to 30%), traders can fine-tune leverage based on volatility expectations. Conservative traders might favor low-haircut assets like PAXG (5%), while aggressive strategies may leverage higher-volatility tokens like PEPE or WIF (30%).
Hedging and Short-Selling Flexibility
The ability to short markets using non-matching collateral opens doors for hedging existing portfolios. For instance, if you hold a large amount of SUI but expect a price drop, you can use it as collateral to short SUI/USD—effectively protecting your net worth during downturns.
Improved Capital Efficiency
Leverage amplifies buying power. When combined with a wider array of collateral, traders can deploy capital more efficiently across multiple positions. This is especially valuable in sideways or low-volatility markets where maximizing returns per dollar matters most.
Potential Tax Advantages
In certain jurisdictions, using crypto as collateral avoids triggering a taxable disposal event. This allows traders to access liquidity while deferring capital gains taxes—a compelling benefit for long-term holders.
The 15 Newly Added Collateral Currencies
Kraken has added the following 15 digital assets to its list of approved margin collateral currencies:
- AAVE – 20% haircut
- DOGE – 20% haircut
- FTM – 30% haircut
- NEAR – 30% haircut
- PAXG – 5% haircut (notably low due to gold backing)
- PEPE – 30% haircut
- RENDER (RNDR) – 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 previously restricted assets significantly more useful for margin positions.
This brings the total number of supported collateral currencies to 38, reinforcing Kraken’s commitment to offering institutional-grade trading infrastructure.
Understanding Haircuts in Margin Trading
A haircut is a risk mitigation mechanism applied to collateral assets. It represents the percentage reduction in an asset’s market value when calculating its usable worth for margin purposes.
For example:
If you deposit $1,000 worth of DOGE (with a 20% haircut), its effective collateral value becomes $800.
Haircuts account for price volatility—higher-volatility assets receive larger haircuts to protect both the trader and the exchange from sudden market swings. Stablecoins typically carry zero or minimal haircuts due to their price stability.
Lower haircuts mean more usable value per dollar deposited, which translates into higher effective leverage and better capital utilization.
👉 Learn how smart collateral selection can improve your margin performance.
Important Considerations When Using Margin Collateral
While expanded options offer benefits, it’s essential to understand the limitations:
- Locked Assets: Any asset used as collateral is temporarily locked. You cannot trade, withdraw, or transfer it while a margin position is open.
- Visibility in Balance: Locked collateral remains visible in your account balance under the Funding tab but is marked as “unavailable” for other uses.
- Eligibility Restrictions: Margin trading is not available in all regions and may require verification or approval based on local regulations.
- Risk of Liquidation: Leverage increases both potential gains and losses. If the market moves against your position and margin requirements aren’t met, automatic liquidation may occur.
You can monitor your available and reserved balances at any time via the Funding tab in your Kraken account dashboard.
Frequently Asked Questions (FAQ)
What is margin trading?
Margin trading allows you to borrow funds to increase your trading position size beyond what your current balance would allow. This amplifies both potential profits and risks.
Can I use staked assets as collateral?
No. Assets staked through Kraken’s on-chain staking program cannot be used as margin collateral until they are unstaked and released.
How do haircuts affect my buying power?
Higher haircuts reduce the effective value of your collateral, lowering your borrowing capacity. Choosing assets with lower haircuts maximizes your usable margin balance.
Are there tax benefits to using crypto as collateral?
In some countries, using crypto as collateral instead of selling it avoids triggering a taxable event. Always consult a tax professional for advice specific to your jurisdiction.
Which stablecoins can be used as collateral?
Major stablecoins such as USDT, USDC, and DAI are eligible for margin collateral with minimal or no haircuts.
Is margin trading suitable for beginners?
Margin trading involves significant risk and is generally recommended for experienced traders who understand leverage, liquidation mechanics, and risk management strategies.
👉 See how top traders manage leveraged positions with precision tools.