It also attempts to measure the quality of a platform’s data and pricing, as well as the effectiveness of monitoring programs in place to prevent things like money laundering, a perennial headache for the industry.Ĭoinbase earns the highest rating in the analysis and is followed by other US and European crypto exchanges that were established in the years following the emergence of Bitcoin and have been meeting stricter regulatory standards.
Because many digital coins are thinly traded and regulation is so uneven, some spot exchange trading can be manipulated by market players, known as whales, that have significant funds and can move prices, as well as by pump-and-dump schemes, says Sandesh Hegde, a Toptal freelance corporate finance expert based in Mumbai.ĬryptoCompare ranks the exchanges, looking at factors like how much of a customer’s crypto assets are stored in cold wallets, which are disconnected from the internet and so can’t be hacked, and what kinds of funds or insurance are in place if hacks occur. How the Largest Crypto Exchanges Ensure Safety (or Don’t)Īround 7,000 cryptocurrencies have been launched through initial coin offerings since 2009, though Bitcoin and Ethereum still account for more than half of trading volumes on global exchanges. We took a look at the biggest and best-known players and found that while, at their core, they share some fundamental similarities in the technology they use, there are vast differences in terms of quality and security, with geography and regulation playing significant roles in those differences. Still, the cryptocurrency exchange business remains the domain of upstarts like Coinbase and its rivals. The Securities and Exchange Commission has fielded multiple applications to approve crypto exchange-traded funds, something European regulators have permitted. Money manager Grayscale Investments has seen assets soar in its trusts that give investors indirect exposure to crypto. Trading in CME Group’s crypto futures, launched in 2017, has surged. JPMorgan Chase, for one, is preparing to unveil an actively managed Bitcoin fund, four years after chairman and CEO Jamie Dimon called the cryptocurrency “dangerous” and threatened to fire any of his traders if they touched it.
Wall Street may have left the lane wide open for the new industry to develop but the establishment has been warming up to the asset class: Bitcoin reached new highs this year, topping $63,000 in April, and other coins and digital assets have seen buying frenzies. “But the competition is going to be fierce.”Ĭoinbase is one of the hundreds of cryptocurrency exchanges launched since Bitcoin was introduced in 2009, offering investors an alternative platform to buy and sell digital coins that until recently were not available on conventional trading sites. “Right now, they have the name in the industry,” says Lambert Despaux, a Toptal freelance private markets expert and the founder of venture capital firm Schema Capital. Still, the game is early, and Coinbase could turn out to be another Netscape, the internet browser sensation whose share offering helped spark the dot-com stock frenzy in the 1990s only to be crushed by the incumbent, Microsoft’s Internet Explorer. It also gave the trading platform an advantage in an industry that aims to reinvent financial services, from stock trading to settlements. Coinbase’s direct listing in April was a watershed moment, putting crypto firmly in the mainstream.
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