A firm that provides comparative data for investors is taking a deep dive into the safety of cryptocurrency exchanges.
In a new study, the Malta-based BrokerChooser analyzes 20 of the world’s most popular crypt marketplaces in a variety of metrics to determine which are the safest for investors.
Taking the top spot with a rating of 4.1 out of five, is Coinbase, the largest crypto exchange in the US. BrokerChooser says Coinbase ranked as “tier 1” in most categories and highlights its emphasis on security.
“Coinbase holds an insurance policy covering clients’ digital assets that it holds and stores US dollar balances in Federal Deposit Insurance Corporation (FDIC)-insured bank accounts separately from its own funds.”
Second on the list is FTX US Derivatives with a rating of 4.0 out of five, an options and futures marketplace owned by the FTX.US exchange, which itself placed seventh.
“FTX US Derivatives is regulated by the Commodity Futures Trading Commission (CFTC) which sees it fall into tier 1 for the majority of the factors in our index.”
UK-Luxembourg-based Bitstamp ranked third with a rating of 3.8, with 98% of its assets stashed in offline cold storage. The study says that the exchange hasn’t faced any regulatory issues in the past five years.
Rounding out the top five safest exchanges tied at 3.7 are Bittrex and Gemini.
“The majority of user funds [on Bittrex] are kept in cold storage, with other measures such as two-factor authentication and wallet and IP address whitelisting. They also provide their users with guidance on best practices such as how to keep your password secure, avoid phishing attacks and disable your account if hacked.”
Gemini is regulated by the New York State Department of Financial Services (NYDFS) and its funds are kept in “segregated bank accounts covered by the FDIC.”
Among the other popular exchanges, Crypto.com took the number eight spot and Binance.US ranked ninth. The original Binance.com came in 15th while KuCoin appears in the 18th slot.
When it came to the safest exchanges in terms of regulation, FTX US Derivatives, Gemini and Kraken Futures all had a perfect score. KuCoin and ByBit ranked last with a score of 1.0 out of five.
Gemini also topped the list for consumer protection while OKX was ranked at the bottom.
Coinbase ranked alone at the top for transparency at 4.8, whereas half a dozen exchanges scored only a 1.0, including Binance, OKX, KuCoin, Gate.io, Bybit and Phemex.
BrokerChooser says that its analysis is centered around “regulation, consumer protection, market fairness and transparency.” Each metric is then broken down into another four sub-categories to provide further granular insights.