Nikolas Sargeant
This year has been challenging for cryptocurrency. With the markets tumbling and the recent dramas with cryptocurrency firms collapsing, there has never been a better time to ensure that your funds are safe and secure.
While safety is paramount, it’s also crucial that you work with a trading platform that offers a variety of funding methods, quality trading products, and a fee structure that suits your trading desires. Each exchange comes with its unique qualities. But, all of them should focus on security and protecting customer assets.
Given the numerous scams and attacks in the last 24 months, we value those exchanges that provide industry-leading security measures. As the industry has matured, so has the quality of exchange security.
But, which is the safest, and where should you invest your money? There are a few options, and here we’ll outline what separates one from the next. Below are five of the safest exchanges operating today.
Binance — Biggest Global Cryptocurrency Trading Platform
Just a month ago, the CEO of Binance, Changpeng Zhao, confirmed that the firm had been the victim of a $570 million hack, with some funds subsequently recovered and the total loss only amounting to $100 million—which is hardly a small sum of money. The lack of regulation in crypto leaves hackers a window of opportunity to take advantage of security systems. We’d see many more hacks in traditional finance if banks were unregulated. So, it’s not a case of a lack of security measures.
Binance has only become stronger since the hack and operates using a Secure Asset Fund for Users (SAFU), an emergency insurance fund that holds a percentage of all trading fees on the exchange. But SAFU is just the beginning of this exchange. Customers are protected with device restriction, address whitelisting, and two-factor authentication (2FA) it is almost impossible for bad actors to access your account. Given Binance’s push for regulation, they have also acquired clearance from the US Federal Deposit Insurance Corporation (FDIC). So, like with SAFU, customers would be covered in case anything goes awry.
Coinbase — The Safest High-Volume Exchange
Coinbase is the second-biggest exchange by trading volume in the United States and is certainly a huge name in the industry. The exchange considers security paramount and holds 99% of its users’ funds offline (cold storage). So, if something were to go wrong, such as a network hack, there would be minimal losses, and customers certainly wouldn’t lose out.
On a more personal level, Coinbase requires that users validate their accounts using a phone number, which will be sent a message every time the users log in to access their accounts. This is backed by 2FA security, which should be considered standard for any crypto exchange. Coinbase is a publicly traded company that has undergone a profound inspection by major financial regulators. For those users that want to stop working with Coinbase, Coinbase allows users to delete their information from the server, further protecting the data of its valued customers or ex-customers.
Gemini — Leading Regulated Crypto Platform
One could argue that Gemini is the safest exchange in the world. The platform is a New York trust company that has been under the microscope of cyber security and banking regulations required by the New York Department of Financial Services, some of the strictest in the world. What’s more, Gemini was the first digital asset exchange to complete a SOC 1 Type 2 and SOC 2 Type 2 exam and earn an ISO 27001 certification.
The exams evaluate the design and implementation of how the crypto firm reports its operations and the way the company operates its security, availability, and confidentiality controls. Much like Coinbase, the vast majority of customer funds are held in cold storage, with just a small amount held in hot wallets for transactions, though even that amount is insured. As you’d expect, Gemini has all the standard 2FA and security key measures.
Kraken — First-rate Security Measures For Investors Globally
Kraken is another exchange that matches the security levels of Gemini. Although it’s slightly smaller in terms of trading volume, it’s still a major provider. The platform meets the financial regulations for the US, Canada, Australia, the UK, and other nations. One big feather in Kraken's cap is that it’s been operating since 2011 and hasn’t ever been hacked.
The platform has a dedicated security team, with servers under 24/7 surveillance by armed guards and video monitors. Kraken also keeps a huge portion of customer funds air-gapped to cold storage, some 95%, with the remaining 5% available in case of large withdrawals. The company conducts regular testing, with hackers attempting to crack their security systems. This ensures not just papering over the cracks but exploring weaknesses and being proactive about fortifying the platform against any potential exploits.
Huobi — Leading Crypto Exchange for Savings Accounts
Huobi has been in the public eye a lot in 2022, with talk of a takeover, but it remains operating at full capacity and is one of the biggest exchanges in the world. It combines capital gains with regular income, including an excellent crypto earn feature, offering customers up to 6.50% APY on certain coins and tokens. The platform is supported by 2FA security and has extensive KYC for new customers to protect the platform and its users against any potential fraudulent accounts.
Huobi Global holds assets in cold and hot wallets, storing the bulk of customer funds offline. The company has a security reserve of 20,000 BTC, which is there to cope with extreme security breaches, providing a safety net for customers if funds are lost. The assurance of compensation is excellent and will certainly put traders’ minds at ease.
