How to Tell if a Crypto Exchange is Trustworthy or Not

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  • Not all crypto exchanges are made equal, with some more reputable than others
  • Knowing which crypto exchanges you can trust is a very important part of navigating the ecosystem
  • This guide shows you how to evaluate centralized crypto exchanges

Trust’ and ‘cryptocurrency’ aren’t phrases that tend to go hand in hand, but when it comes to using a cryptocurrency exchange, trust is essential. The same can be said for security; you need to know that the entity handling your money is going about things the right way and that you aren’t at risk of losing it through a hack or negligence on the exchange’s part.

With almost 500 centralized exchanges out there today, the issue of which is the safest crypto exchange is therefore more important than ever. In this guide, we break down what constitutes a trusted crypto exchange and what to look out for before you hand your cryptocurrency over to someone else to look after.

Age Matters

While an exchange’s age alone doesn’t define its safety, longevity can enhance its reputation. Older exchanges often possess valuable experience in navigating bear markets and establishing robust security measures, making them among the most trusted crypto exchanges. Notable exchanges that have stood the test of time include Kraken, Bitstamp, OKX, and Coinbase.

Compliance Signals Trust

Evaluating an exchange’s compliance with regulations provides insights into its trustworthiness. Most top crypto exchanges now demand Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, signaling a commitment to regulatory standards. Avoid exchanges that permit anonymous accounts, as they may attract illicit activities and regulatory scrutiny.

Prioritizing Security

Security is paramount when considering safe crypto exchanges. Hacks can jeopardize customer funds, so assessing an exchange’s historical security record is crucial. Exchanges like Kraken and Coinbase, with minimal hacking incidents, exemplify strong security practices. Additionally, consider how the exchange manages account security, including features like two-factor authentication.

Reputation Matters

Every exchange faces challenges, but how they address them matters most. Review sites offer valuable insights into an exchange’s performance and customer satisfaction. Assess user feedback across mainstream and crypto-focused platforms to gauge an exchange’s reputation.

Diversify and Verify

In the crypto world, trust is earned over time. Many users maintain accounts with multiple exchanges as a safeguard against unforeseen issues, with the collapse of FTX being a prime historical example. Create a shortlist of the safest crypto exchanges based on user experiences, then delve into compliance and security details to ensure they align with your expectations.

Trust Yourself

No exchange is perfect, but, as you will find if you’re new to the space, some are much more trustworthy than others. However, don’t forget that any centralized exchange has the power to seize your assets if it thinks you have transgressed in any way, or on the orders of a government.

To guard against this, ensure that your long-term holdings are held off these exchanges and in cold storage just in case.