Setting new standards for crypto exchanges in the post-FTX era: report

In the year 2022 saw a historic decline in trust in exchanges and other crypto service providers. The failure of Sam Bankman-Fried's FTX and Alex Mashinsky's Celsius is still fresh in the community's memory, with the SBF experiment recently ending. These cases serve as a painful reminder that fraud and bad business practices can occur in corporations of any size, and that crypto as a startup industry is particularly vulnerable. An efficient website, high traffic or prime-time television commercials are no guarantee that a customer's savings are safe.

In order to advance the industry, it is necessary to set new standards for centralized third-party service providers in crypto. To this end, a new report by Cointelegraph Research conducted a survey of 9 major crypto exchanges (Binance, Bit2Me, Bitfinex, Bitstamp, Bybit, Coinbase, HTX, Kraken, OKX) and compared them with a special focus on consumer and funds protection.

Download a PDF of the report for free from the Cointelegraph Research Terminal.

Look at the facts

The report analyzes whether companies are in a tax haven or customer support jurisdiction, how they can ensure the transparency of their company's finances and that consumer assets are safe and well managed. These considerations are particularly relevant to risk-averse individuals and businesses – those willing to compromise on payment and transaction volumes to ensure that their funds on payments and transactions have all the safeguards.

Some jurisdictions, often known as tax havens, make it difficult for companies to do less for consumer protection and regulatory compliance. This includes everything from protecting personal information to responsible risk disclosure. All other things being equal, it can sometimes be a red flag if an exchange requires a less regulated environment. The map below shows how secure the customer is among centralized exchanges in some of the most popular regions.

Based on the analysis, Bit2Me and Kraken stand out in all the investigated categories. Both are headquartered in jurisdictions with strong customer protection regulations and have a trusted third-party backup audit and payment infrastructure. Additionally, they disclose a wide range of threats to their users through their interfaces.

Download the full report in PDF for free from the Cointelegraph Research Terminal.

To achieve true mass adoption, crypto must be brought into regulatory frameworks. This does not mean abandoning the principles of decentralization and privacy, but rather finding a balance where these principles can coexist with legal and financial protections.

Regulatory transparency and compliance, especially those mandated to protect consumers, will increase trust among users and open opportunities for institutional investors and businesses to enter the crypto space. The crypto community must strive to create an environment where the benefits of crypto are accessible to all by reducing fraud, money laundering, and bad business practices that can endanger personal cryptocurrency savings.

The opinions expressed in this article are for general information purposes only and are not intended to provide specific advice or recommendations for any individual or any security or investment product.

Cointelegraph does not endorse the content of this article or any product mentioned therein. Readers should do their own research and take full responsibility for their decisions before taking any action related to the products or companies mentioned.