Top 15 Important Factors to Consider When Choosing a Crypto Exchange

The crypto market is still relatively new. So, it’s important to know the reputation of your preferred crypto exchange. Multiple exchanges have engaged in dishonest practices, such as exit scams and hacking, which have put customers in uncomfortable situations.

So, it’s important to investigate these exchanges. One simple way to do this is to search on Google. You can type “scam” into Google and check out the outcome. In addition, places like Twitter are good for getting reviews about an exchange. Watch out for negative comments from aggrieved users. In addition, read the platform’s terms and conditions and take note of anything that seems strange or frightening.

One of the biggest crypto exchange factors to consider is security. The growing use of cryptocurrency has made exchanges more attractive to criminals. So, it’s important that you only select an exchange that uses strong security measures to protect your funds. Verify if the exchange has two-factor authentication (2FA). If that’s unavailable, you should reconsider using such a platform. Look out for other security features, such as custodial storage services and cold storage asset reserves. 

The more security features an exchange uses, the better for your funds. Exchanges like Crypto.com’s mobile app support biometric login, which authenticates your identity using the smartphone’s fingerprint and face recognition. Some other platforms, like Kraken, require government-issued identity cards, such as driver’s licenses. This helps them easily spot imposters. 

Another crypto exchange factor to consider is liquidity. Ensure the platform has enough liquidity. This means the capacity to convert cash into coins or vice versa with ease and without having to pay a significant markup. Crypto prices fluctuate quickly. So, an exchange with sufficient liquidity is a big deal. There are different ways to study their liquidity. For example, use platforms like CoinGecko or CoinMarketCap to check out the exchange’s trading volume. It’s always a good sign if the numbers are on the high side. Exchanges like Binance, OKX, Coinbase, and eToro have good liquidity.

Some crypto exchanges are banned from operating in certain countries or locations. So, this means they can’t freely provide their services there. Binance, for example, has limitations in some European countries. So, it’s best to ensure the exchange you select is free to operate in your country. Also, verify that the exchange complies with your local laws and provides native support.

If you are just starting, you’ll need an exchange with a clear interface that you can understand. Go for crypto exchanges that are appropriate for your level of experience and have a clear, user-friendly layout. In addition, an exchange with a mobile app provides an extra layer of ease.

One of the first things you should consider when selecting a cryptocurrency exchange is the fee structure. Crypto exchanges charge fees for each transaction. These fees vary from exchange to exchange and are based on the percentage of your trade. Traders who buy and sell more regularly would need a platform with better fees to save costs. Certain exchanges impose withdrawal limits and fees. So, it’s best to investigate this before trading on the platform.

At some point in your trading, you’ll probably need an exchange that accepts fiat money to help move currencies such as USD into the crypto market for trading purposes. Certain exchanges are compatible with certain banks and offer a variety of fiat options, while others do not. One of the best factors to consider is if an exchange accepts fiat and which bank it partners with. Also, look at the number of currencies available and decide if they meet your needs.

The prices of crypto assets differ among crypto exchanges. There are several factors behind this. For example, volume and participant location can make assets trade higher or lower on one exchange compared to another. Taking note of these differences can help when selecting an exchange, particularly when altcoins are involved. It’s better to go for an exchange with a track record of providing better prices.

Trading could be difficult at times, and you’ll need the help of the exchange. This is where customer service comes in. Unfortunately, not all exchanges have responsive customer service. Some take a while to provide help, and when they do, it’s barely enough to give clarity. So, go for an exchange with multiple customer support channels. This includes live chat, email, and phone calls. Getting good customer care could be a lifesaver when things go wrong.

Crypto exchanges often support different assets. It’s always easier if your preferred exchange covers a wide range of assets. Platforms like Binance cover a wide range of coins, including new entrants that could be scarce on other platforms.

Security and compliance are big deals in crypto. Some exchanges have imposed Know Your Customer (KYC) and Anti-Money Laundering (AML) practices. This requires users to provide personal details before creating an account. However, the details differ from exchange to exchange. Some require proof during transactions. So, make sure you find out all these and if they suit your needs before using such a platform.

The time it takes for an exchange to verify new users is also to be factored in. It is important to note how long verification procedures such as KYC take to finish. Some exchanges have extremely drawn-out KYC procedures that could take weeks. You should avoid such platforms if you plan to trade almost immediately.

An insurance fund is also important when selecting an exchange. As the saying goes, “Anything can happen in crypto.” So, it’s best to ensure that, in the worst-case scenarios, you are still safe. Exchanges like Binance have money set aside to reimburse users in certain situations. That’s impressive. This means you’ll still get your funds if the exchange suffers a hack. 

Verify if the exchange protects your money with Federal Deposit Insurance Corp. Exchanges must store your cash deposits in a custodial account with a bank that is insured by the FDIC. This protects your deposits up to $250,000. The top exchanges provide this service. So, look out for this.

Transparency is a big deal in crypto. It could save you from being wrecked and losing your funds. So, when searching for an exchange, select platforms that are transparent and offer audits and trading volume reports regularly. Also, prioritize exchanges that provide timely responses regarding your investments.

Experienced traders would require exchanges that provide a wide range of trading tools and features. This includes margin trading, order types, charting tools, and stop-loss options. So, ensure your preferred exchange has the tools to match your trading needs.