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Coinbase Global (NASDAQ:COIN) has been ranked as the safest cryptocurrency exchange for investors, followed by FTX US Derivatives, Bitstamp, Bittrex and Gemini among a list totaling 20 trading platforms, according to a report by BrokerChooser.
The exchanges were ranked based on BrokerChoosers’ so-called safety methodology, which is built on four main pillars: regulation, consumer protection, market fairness and transparency, the report said. Those pillars contain a combined 16 sub-categories relating to a number of qualitative and/or quantitative factors.
Coinbase (COIN), America’s largest crypto exchange by trading volume, saw an overall safety score of 4.1 out of 5, as per the report. It ranked as a tier 1 (best performing) exchange for most of the sub-categories and is “well known for its robust security features,” BrokerChooser noted, adding that COIN is the most “transparent” (4.8/5) exchange since it “does a good job of making information readily available to the public in terms of its corporate structure, financial statements and legal documents as well as having a relatively simple product offering.”
Likewise, in the week ended May 27, Cowen analyst Stephen Glagola highlighted Coinbase’s “security infrastructure and regulatory adherence as a structural advantage vs. top global competitors.” While its stock price hovers near all-time lows amid a broader crypto slump, Coinbase has recently entered the Fortune 500 list of the largest U.S. firms by revenue.
FTX US Derivatives, a regulated crypto futures and options exchange and clearing house, received a safety score of 4.0. Formerly known as LedgerX, FTX US Derivatives ranked well across most pillars except for “transparency,” with a score of 2.3, implying it offers “little to no financial or legal transparency and complex products,” the report said. By comparison, its parent company FTX (2.6 safety score), owned by famed billionaire investor Sam Bankman-Fried, was classified as the eleventh safest crypto exchange among a list of 20 exchanges.
U.K.-based Bitstamp (3.8 safety score) was marked as the third safest crypto exchange, with pillar ratings of 4.0 in “regulation,” “market fairness” and “transparency.” It holds 98% of its assets in cold crypto storage, a secure way to store crypto against potential hacking breaches, the report said. Also, the company “offers simple, straightforward products, hasn’t experienced any regulatory incidents in the last five years and has an added layer of protection with a crime insurance policy covering theft, and also uses two-factor authentication and address whitelisting.
By contrast, Binance (1.6 safety score), the world’s largest crypto exchange, scored as only the 15th safest exchange, with the worst pillar rating in “transparency” (1.0). But its U.S. division, Binance US (2.8 safety score), managed to be in the top 10 cohort, with the best pillar rating in “regulation” (3.5) and consumer protection” (3.5).
The safest crypto trading platforms (aside from those listed above) in descending order are: Kraken Futures (3.4), Crypto.com (CRO-USD) (3.0), Kraken (2.8), Phemex (2.1), Huobi Global (1.8), MEXC Global (1.8), Bitfinex (1.6), Gate.io (1.5), KuCoin (KCS-USD) (1.4), Bybit (1.3), and OKX (1.1).
Previously, (May 23) FTX said it will be on the hunt for brokerage start-ups.