Obligatory "CEX bad" comments incoming but I'll be transparent anyway. I'll just ignore the knee-jerk reactions. Thanks in advance to anyone adding value to this post.
As many might already know, I am based in Germany. I've been using Kraken as a convenient way to buy bitcoin for some years now. Since April 2022, they even supported lightning with zero withdrawal fees. This was a total game changer for me.
I liked this very much since not only do I not pay anything for withdrawals (or coinjoins), but it also gave me a nice layer of privacy.1 They know the node pubkey that I sent to but as @DarthCoin often likes to mention, lightning can be a washing machine. They know how much bitcoin I bought when but they can't tell what happened after withdrawal: lightning breaks chainanalysis.
However, this is no longer available. They announced back in July that every German client had to reverify themselves because they were moving them to a different custodian for compliance reasons so not really in my interest:
From September 10, 2024, verified clients will face BaFin regulated counterparties (DLT Securities GmbH and DLT Custody GmbH) for crypto services and a Central Bank of Ireland (CBI) regulated counterparty (Payward Ireland Limited) for fiat services (bank deposits and withdrawals).Overall, the experience for our clients will remain familiar, utilizing the same Kraken interfaces and providing access to services currently available to German clients.
After some back and forth if I would use this moment to stop using CEX's and completely switch to RoboSats, a p2p lightning exchange that I used a few times in the past, I decided to bite the bullet and reverify myself when I could no longer simply close the aggressive prompts because my account was restricted to only withdrawals until verification now.
I decided to do it because I like to buy small chunks of bitcoin daily and I believed this would be too inconvenient on something like RoboSats where you have to wait until someone takes or accepts your order. Additionally, you're wiring money to random people which can look suspicious and lead to your bank account getting closed. So to be safe, I would have to open a separate bank account only for that. That was just too much for me so simply continuing to use Kraken seemed like the better option considering all trade-offs. I'm not that guy that I met on a conference that exclusively buys bitcoin p2p with cash. I believed the KYC problem wouldn't be that different compared to how it previously already was. It would now just be clearer to the BaFin that I buy bitcoin but I never really believed that wasn't the case already anyway. I deposit money from my German bank account to a known crypto exchange. It's not a mystery what happens on these exchanges.
I didn't think to check if lightning would still be supported. I briefly skimmed the changes. I totally forgot about how much I cared about lightning withdrawals. It seemed like it would only be a formal change.
However, after September 10, 2024, the option to withdraw over lightning no longer showed up. I opened the support chat and mentioned my problem:
Me: I can't withdraw to Lightning. The option doesn't show anymore.[...] convincing the bot I need a human [...]Support: I see what you mean about the option not showing on your account. We are experiencing downtime due to scheduled maintenance to perform platform changes in Germany. Please refer to our status page (https://status.kraken.com/incidents/1hc0tz8cw58d) to stay up-to-date with the progress. Once this is complete your account will be returning to normal usage 🙂Me: Ah okay, thank you!Support: You are most welcome, do you have any other question or concern ?Me: No, thank you
I actually indeed had a question: I asked about the zero withdrawal fees and about BOLT12 support. It was annoying to create a new lightning invoice for every withdrawal that I had to confirm using 2FA. However, they couldn't give me any information about it:
Technical support: Thanks for reaching out.Related to our lightning integration, for security we are not able to provide details related to our internal funding infrastructure. However, Kraken has developed a highly secure Lightning infrastructure which facilitates the current fee offerings.Related to BOLT12, Kraken has not announced any support for BOLT at this time. Related to this, while we are always open to adding new digital assets and funding options to our exchange, we never announce in advance which ones will be listed. The best way to get up-to-the-minute details regarding assets listed on Kraken is to read our email newsletters and follow our Blog (http://blog.kraken.com/) and X (formerly Twitter) feed (https://twitter.com/krakenfx).I hope this information is helpful. Please feel free to let us know if you have any additional questions.
This reply sounded a bit like they think BOLT12 is a shitcoin but I gave them the benefit of the doubt.
Me: No more questions, thank youTechnical support: You're welcome. And we appreciate the feedback regarding BOLT12.
I always appreciated that fast support via chat. I thought that would be it and I could soon withdraw my funds over lightning again (and maybe even with BOLT12 at some point?!).
However, today, I checked the status page again and saw that the maintenance is complete but the option still didn't show. I continued the chat:
Me: Hi, I see on https://status.kraken.com/incidents/1hc0tz8cw58d that the maintenance is complete now but I still can't withdraw using lightning.[...] bot stuff [...]Support: [...]Please try the following browser troubleshooting steps:
- Make sure your browser is up-to-date
- Try incognito/private mode on your browser
- Clear your browser's cookies and cache
If the above steps do not work:
- Try another browser - our site is tested on, and works with, most modern browsers
See this support article for further instructions: https://support.kraken.com/hc/articles/360001200183
That generic advice offended me a little bit but I did indeed try out incognito mode at least even though it made no sense to me how something like this could be caused by a browser issue. I was also getting pissed because it sounded before like it's just caused by regular maintenance which apparently wasn't actually the case:
Me: So you're saying withdrawing via lightning should work now for German customers? It does not work in incognito mode. This sounds like some generic advice. I believe you have disabled lightning for German customers since it doesn't show since then anymore. I am only on Kraken because of this and that lightning would disappear wasn't mentioned during the transition.Support: So the option for using lightning is not there at all now?Me: Yes, just poof, gone. I can only select "Network: Bitcoin" now during withdrawal. It used to show "Lightning" there, too. I know you're not responsible for it but I want to express that this is a serious downgrade for my experience.
Support: I'm double checking the information for you. One moment please.Support: Thank you for your patience.I have looked into this and it does appear we are now not currently supporting BTC Lightning transactions.This change has take place from September 10th due to new regulatory regulations. Please see further information here: https://support.kraken.com/hc/en-us/articles/overview-of-changes-for-german-clientsFurther information can be found here on supported assets: https://support.kraken.com/hc/en-us/articles/asset-support-for-german-clients
My heart dropped. As mentioned, I already had the feeling that they just don't support it anymore for German clients but getting the confirmation was still disappointing. The day before, I was dreaming about BOLT12 support and now I wasn't even able to use lightning until who knows when.
Me: Where is mentioned that lightning will be no longer supported?Support: Under this section of acceptable withdrawal addresses - https://support.kraken.com/hc/en-us/articles/supported-address-formats-for-cryptocurrency-withdrawal-for-german-clientsLightning addresses are no longer supported.
Indeed, in this table only addresses that start with
3, bc1 or bc1p were listed as supported. No lnbc. -_-Me: Okay, I see. Any ETA when this will be supported?Support: Currently it is down to regulatory issues but as soon as we are able to bring back the service we will 😊️.
Me: Okay, thank you for the information. Have a nice day. I assume you can't tell me more about those regulatory issues.Support: There is nothing more we can provide at this time. These are constantly on going and we are looking to provide all our clients in all regions with the same operational benefits.Me: Okay, that is all thenSupport: Happy to help 😀️. It's been a pleasure speaking to you today!Should you need anything else, we are here 24/7 to help. Please do not hesitate to contact us at any time!Have a great day and thank you for choosing Kraken 🐙.
You're welcome but I regret it -_-
I guess I have to find a new CEX that supports lightning withdrawals and ideally even with zero fees or indeed switch to a DEX like RoboSats.
Footnotes
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I wondered how zero withdrawal fees made sense for them though. ↩
