November 8, 2021

Safest Crypto Exchanges

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Hack. Breach. The last words you want to hear when searching for a place to buy crypto. Review this list of the safest crypto exchanges before you buy.

With fortunes of Bitcoin and other crypto at stake, security has never been more important.

And for thieves, the incentive to steal has never been greater.

Today, exchanges are doing more to make sure your holdings are secure. However, some do it better than others.

In this guide, find out which crypto exchanges get top marks for security, plus which features to look out for.

Safest Crypto Exchanges

One exchange, in particular, stands out from the rest on this list as being the top choice for security-minded investors.

Beyond our top pick, check out how other popular exchanges score in security and privacy.

Gemini: Safest Cryptocurrency Exchange

Gemini's goal has always been to provide the safest crypto trading experience possible. They have taken measures to protect users from all manner of threats, both internal and external.

The small amount of crypto Gemini does keep online has the protection of a FIPS 140-2 Level 3 rating or higher, and is insured.

Gemini maintains strict internal controls as well. Multiple signatories are required to transfer crypto out of cold storage. Employees undergo criminal background checks. And Tyler and Cameron Winklevoss cannot transfer crypto out of cold storage.

They don't store objects of value like private keys in company offices. They're kept in controlled facilities. And for remote access, public key authentication from credentials stored on hardware tokens is necessary.

Below, review some of the impressive measures Gemini takes to secure your crypto.

Security features used by Gemini

  • Two-Factor Authentication: Required to log in or make withdrawals; Gemini supports WebAuthn hardware security keys, as well as SMS.
  • Cold Storage: Gemini keeps most of their crypto stored offline, in an inaccessible, air-gapped system. It is geographically distributed and requires multiple employees to operate.
  • Address Allowlisting: Approved addresses can be used to limit where withdrawals are allowed.
  • Insurance: Gemini has digital asset insurance that protects against theft, as long as it isn't the result of unauthorized access to the user account.
  • Withdrawal Limits: ACH transfers are limited to $10,000 per day and $30,000 per month; Wire Transfers have a $100 minimum. Digital Asset withdrawals are free ≤ 10 per month, but incur a fee over 10 per month.
  • Biometric Login
  • Bug bounty: Offered to security researchers who find and disclose flaws in their system
  • Website data is transmitted over encrypted Transport Layer Security connections like HTTPS
  • To prevent brute force attacks, account operations are rate limited, and personal information is encrypted
  • Partnerships with third-party vendors to protect against distributed-denial-of-service (DDoS) attacks
  • Internal-only portions of the site are not connected to the public internet.

Has Gemini ever been hacked?
To date, Gemini has never been hacked.

Coinbase & Coinbase Pro

Popular exchange Coinbase and their advanced trading platform, Coinbase Pro, follow at a close second to Gemini when it comes to safety.

They employ many of the same features that Gemini does. In fact, it's only a few issues that keep Coinbase from tying for safest exchange.

First, Coinbase's lack of support for customers in trouble is worrying. The platform recently reported that "0.004% of its users had experienced account takeovers in the past year."

None of these events appear to constitute a hack, but rather user error. However, many people still didn't receive adequate support from Coinbase when their holdings were in jeopardy.

Second, Coinbase has higher withdrawal limits for fiat currencies, making it more likely that cash could be taken in the event of unwanted account access.

Finally, Coinbase has intentions of selling blockchain analytic services to the IRS and DEA, according to public documents.

These services can potentially be used to identify individual holders of cryptocurrency, which many feel goes against its primary ethos.

Security features used by Coinbase

  • Two-Factor Authentication: SMS or Google Authenticator
  • Cold Storage: Coinbase keeps around 97% of users' funds offline.
  • Address Allowlisting
  • Biometric Login
  • Withdrawal Limits: $50,000 per day
  • Insurance: Coinbase has secured independent insurance for coins lost to cybersecurity breaches or employee theft for up to $250,000, and USD balances are FDIC insured for up to $250,000.

Has Coinbase ever been hacked?
To date, Coinbase has never been hacked.

Coinbase

Earn $5 in bitcoin for getting started on Coinbase

Personalized $5 reward offer is displayed after account creation. Limited time offer and while supplies last. Offer available to new users who have not previously verified their identification. Offer not available to new users who were referred to Coinbase through the Referral Program or who have previously opened an account using different contact information. Coinbase may update the conditions for eligibility at any time, in its sole discretion. See Terms and Conditions.

Coinmama

Coinmama does not have many of the features listed here as being indicators of a secure cryptocurrency exchange.

They have no insurance, no address allowlisting, no withdrawal limits, and no cold storage.

So why would we recommend them?

Coinmama is a noncustodial exchange. Unlike many popular exchanges, like Gemini or Coinbase, Coinmama does not hold your coins—you do.

When you buy cryptocurrency on Coinmama, you must have your own wallet, because they need somewhere to send it once you purchase it, usually in very short order.

If you prefer storing your coins in a wallet you control, rather than keeping them on an exchange, then Coinmama may be right for you.

While it isn't required, Coinmama does employ two-factor authentication via Google Authenticator (App Store, Google Play Store) or Authy.

Has Coinmama ever been hacked?
While no funds have ever been stolen from Coinmama users, in February 2019 they did experience a data breach in which customer emails and hashed passwords were leaked.

What to Look For in a Safe Crypto Exchange

Crypto exchanges use a variety of security measures to protect your holdings and information.

While some measures are more technical and harder to understand, many are common-sense features. Here's what you ought to look for when finding your ideal, safest exchange:

1. Two-Factor Authentication

This is the first line of defense in account protection. If your password isn't secure, two-factor authentication may be the only thing standing between you and hackers.

Every exchange should offer it. Good exchanges will require it. And if it's a question between SMS and an authenticator app, choose the app. A separate device, such as a YubiKey, is even better.

2. Cold Storage

Quickly becoming the industry standard, cold storage involves keeping your coins offline. This makes them inaccessible even in the case of a breach.

Most companies will do this with a large portion of their holdings, while keeping a few percent available for quick access.

3. Address Allowlisting

Also referred to as "whitelisting," this feature allows you to choose, in advance, which wallet addresses your account can make withdrawals to.

This is a mitigation technique that only comes into play once your account has been accessed by someone you don't want to. Here's typically how it works:

  1. First, hackers will try to withdraw funds from your account to their own wallet as quickly as possible. At this point, you'll likely be without recourse.

  2. If they have access to your account, but can't withdraw, they will likely try to add their address to the allowlist.

  3. In most cases, the exchange will notify you, and withdrawals will be frozen for a predetermined period (usually 24-48 hours) when a new address is added.

  4. This gives you time to recover control of your account and block any undesirable withdrawals.

4. Insurance

When you store cash in a bank, it's usually insured by FDIC and SIPC protections (up to a limit). Not so with crypto.

Cryptocurrency can't be insured by either FDIC or SIPC. That means exchanges need to acquire insurance policies on their own, either directly or through a custodian.

Insurance can be the difference between getting your money back in case of a hack—or not.

The other option, though seldom employed, is to have a separate fund set aside by the exchange to repay customers if their coins are stolen.

As long as it's enough to cover everything that's lost, it's a viable alternative.

5. Withdrawal Limits

The truth about security is it can sometimes be inconvenient.

A withdrawal limit might seem like a pointless one, until someone tries to empty your entire account in one afternoon.

Much of the time, thieves don't need to hack an exchange if they can get access to your account by other means, phishing being a common one.

Lower withdrawal limits can mean the difference between a partial loss and a total one.

6. Biometric Login

Biometric login is the process of logging into a platform by confirming your voice, face, thumbprint, or other feature that's specific to you.

This is probably the least important feature on this list. But when a platform uses it, they'll likely require a pin or password every time you access your account, which you can only circumvent by being you.

7. No Previous Security Breaches

It's great if a crypto exchange offers all the bells and whistles to keep your holdings safe.

But you still might be wondering, have they been hacked before?

While their past isn't always an indication of what will happen in the future, it is a useful indicator to know whether an exchange has experienced security failures before.

And if an exchange has been hacked, what did they do about it? Be sure to thoroughly research the exchange's history of breaches and how they were handled.

Don't confuse security for privacy.
Some exchanges will do everything they can to protect your coins and your cash, but are less picky about your data. If privacy is a concern, make sure to find out whether an exchange has policies to collect it or share it with third parties.

More Crypto Platforms to Consider

Binance
Binance and its U.S. version, Binance.US, are some of the most widely used exchanges in the world.

Their security features rival those of the others mentioned in this article, but they have a Secure Asset Fund in place of insurance. USD balances are also FDIC insured.

Notably, Binance was hacked for roughly 7000 BTC in 2019, but said they would use their secure asset fund to reimburse victims. The coins were taken from its hot wallet, where they store roughly 2% of their holdings.

Kraken
Kraken is a popular crypto exchange that employs many of the same security features that Gemini and Coinbase do.

Their policy is that exchanges were never meant to be used as cryptocurrency wallets, and users should keep hold of their own coins.

As such, they do not have any insurance in the event of theft. Kraken has never been hacked.

eToro
eToro is a well-known social trading cryptocurrency exchange that also deals in other forms of trading outside the U.S.

eToro has $1,000,000 in investment insurance for clients of eToro Europe, UK, and Australia, and USD balances FDIC are insured up to $250k.

However, they have no digital asset insurance for crypto, and no address allowlisting option. With 2FA and cold storage, however, they should be a relatively safe option.

Interested in social trading? Read our guide to learn how social trading and copy trading make it possible to earn without hours of research.

Bottom Line

Safety should always be something you consider when choosing a cryptocurrency exchange. If you're interested in the safest custodial exchange, you can't go wrong with Gemini.

And if you prefer storing your coins in your own wallet, Coinmama is an excellent option.

Of course, security isn't the only consideration, and if other factors like fees or ease of use top your list of priorities, rest assured that you don't have to sacrifice security in order to get them.

Jeremy Harshman is a protector of art and writing at CreditDonkey, a crypto comparison and reviews website. Write to Jeremy Harshman at jeremy.harshman@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.

Read Next:

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Coinbase Pro Review

Coinbase Pro Review

Gemini Review

Gemini Review

Coinbase

Earn $5 in bitcoin for getting started on Coinbase

Personalized $5 reward offer is displayed after account creation. Limited time offer and while supplies last. Offer available to new users who have not previously verified their identification. Offer not available to new users who were referred to Coinbase through the Referral Program or who have previously opened an account using different contact information. Coinbase may update the conditions for eligibility at any time, in its sole discretion. See Terms and Conditions.


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