The Safest Crypto Exchanges: How to Choose a Secure Platform for Trading

Security should be your first priority when choosing a cryptocurrency exchange. Whether you’re just getting your feet wet or you’re a seasoned crypto trader, you need to know your digital assets are safe. Because cryptocurrency is an uninsured asset, exchange platforms with weak security put you at risk of significant losses due to scams and cyberattacks. We’re here to help you choose the safest crypto exchange that has the features you need.

Crypto Exchange Overview

Crypto isn’t protected like other investments. When you buy securities through a traditional brokerage like Fidelity or Vanguard, your assets are insured by the Security Investor Protection Corporation (SIPC), but the government doesn’t insure cryptocurrencies. Instead, you must rely on the exchange itself and your own personal security measures to protect these assets.

So what is the safest crypto exchange of the many options out there?

Coinbase: Reputation and Security Features

Coinbase is known for being one of the safest crypto exchange apps, and for good reason. It’s one of the more secure public trading platforms, offering strong security protocols and privacy standards along with a user-friendly interface. Using the Coinbase app feels very similar to trading securities through the popular Fidelity app. Whether you’re a beginner or just a cautious investor, Coinbase is worth considering.

While crypto is never federally insured, any U.S. dollars you have stored in your Coinbase crypto wallet are insured by the FDIC. The platform also carries private crime insurance, which covers assets stored in custodial wallets if they’re stolen or hacked.

Kraken: Advanced Security Protocols

If you want a platform that offers margin trading and other more advanced features but don’t want to compromise on security, Kraken may be your best bet. Margin trading allows you to use leveraged (borrowed) assets to trade larger amounts of capital than you actually own. It’s a risky strategy that is typically not a good idea for beginners to venture into, but it can pay off if you make the right trades at the right times.

Kraken consistently ranks among the best crypto margin trading exchanges. The exchange protects your assets using a combination of cybersecurity measures and physical barriers. The platform stores a percentage of all users’ crypto assets offline in cold storage. It also protects its infrastructure in secured facilities with 24/7 surveillance and armed guards.

Gemini: Regulatory Compliance and Safety

Cryptocurrency exchanges are facing increasing national and international regulations. You need a trading platform that can keep up with these complicated rules and requirements. Gemini is a large centralized exchange that offers a wide selection of cryptocurrencies and maintains high compliance standards. It communicates its policies and audit results to its users via its website.

Gemini was the first crypto exchange to successfully complete internationally recognized Systems and Organization Controls (SOC) evaluations. These audits verify the platform’s financial and security claims.

Binance.US: Strong Security Measures Explained

Because the crypto industry is still in its infancy, bad actors often try to take advantage of gaps in security and users’ lack of experience. Finding a platform that provides strong security is one thing, but an exchange that reimburses you if your assets are stolen is another level of safety.

In addition to its multi-layered security measures, Binance.US also maintains a billion-dollar Secure Asset Fund for Users (SAFU) to reimburse you in the event of a large-scale breach or hack. You can also opt into the access control mechanism, which allows you to whitelist specific IP and wallet addresses, limiting withdrawals as an additional security measure.

Multi-Factor Authentication

The safest cryptocurrency exchanges almost universally offer multi-factor authentication (MFA). MFA requires you to verify your identity using two or more forms of authentication before you can access your account.

Common MFA methods include:

• One-time-passwords: Your exchange may send you a one-time password or pin via text message or email.
• Authenticator apps: Some exchanges use third-party security apps like Google Authenticator, Duo Mobile, or Microsoft Authenticator to generate time-sensitive codes.
• Biometric authentication: Your exchange may give you the option to enable fingerprint or facial recognition.
• Hardware security keys: You may be able to use physical USB devices like YubiKey to help protect your account.

MFA can significantly reduce the risk that your account will be accessed by hackers or other bad actors, even if your password is compromised. Always activate MFA if it’s available.

Cold Storage

Cold storage involves keeping your crypto and private keys offline. Using cold wallets to store at least some of your crypto is always a good idea to truly protect your assets from phishing attacks, hacking, and other cyber threats. Some online (hot) wallets are more secure than others, but none are as secure as cold storage.

Examples of cold storage options include:

• Paper wallets: Printed records of your private and public keys (usually QR codes)
• Hardware wallets: Physical devices that typically look like USB drives
• Sound wallets: Software that stores private keys as encrypted audio files
• Air-gapped devices: Offline computers that generate and store private keys
• Deep cold storage: Safes or vaults where you can store your cold wallets or private keys for long periods of time

You can store your crypto in cold storage independent of an exchange. Many centralized and decentralized exchanges also offer cold storage, including Coinbase, Binance.US, Bitfinex, Kraken, and Gemini.

Insurance Coverage

When you own or trade digital assets, always remember they don’t have the same insurance protections as traditional currencies. Some trusted crypto exchanges hold private insurance policies, but the scope of coverage is limited and usually doesn’t extend to users’ individual wallets.

Regardless of how secure a crypto exchange’s standards may seem, it’s still crucial to take responsibility for your own security. Always use strong, unique passwords and enable multi-factor authentication. Avoid accessing your account on public Wi-Fi. To be extra careful, consider using a virtual private network (VPN).

Making Informed Choices in Crypto Trading With MoneyAtlas

What is the safest crypto exchange in the U.S.? The answer depends on what features you need and your level of experience with cryptocurrency. Binance.US, Coinbase, and Gemini are all Tier 1 crypto exchanges. They’re also beginner-friendly. Kraken is often considered the safest crypto exchange in terms of cybersecurity, but it’s more geared toward experienced traders.

Looking for more information on crypto trading or other financial topics? MoneyAtlas can help you make sense of everything from loans and insurance to budgeting, saving, and investing.