2022 has seen a historic decline in trust in exchanges and crypto service providers. The collapse of Sam "SBF" Bankman-Fried's FTX and Alex Mashinsky's Celsius is still fresh in the community's mind, and SBF's criminal trial recently concluded. These incidents are a sad reminder that fraud and bad business practices can occur in businesses of any size, and that cryptocurrency as a startup sector is particularly vulnerable. A quality website, a high volume of transactions or television advertising do not guarantee the safety of the customer's savings.
Establishing new standards for third-party encryption providers is essential to moving the industry forward. To that end, a new report from Cointelegraph Research compares nine major cryptocurrency exchanges: Binance, Bit2Me, Bitfinex, Bitstamp, Bybit, Coinbase, HTX, Kraken, and OKX, with a focus on protecting users and funds.
Download a free PDF of the report from the Cointelegraph Research Terminal.
The report analyzes how companies can offer customer-friendly tax havens or jurisdictions, corporate financial transparency, security and proper management of user assets. These issues are particularly relevant for risk-averse people and businesses; those who are willing to compromise on fees and transaction rates to ensure that funds held on exchanges have all the possible guarantees.
Some jurisdictions, often called tax havens, allow companies to do less when it comes to consumer protection and regulatory compliance. This ranges from storing personal information to responsible risk communication. All other things being equal, this can sometimes be a warning sign if a trade requires a less regulated environment. The map below shows customer safety in some of the most popular areas across central exchanges.
According to the analysis, Bit2Me and Kraken stand out in all categories. Both are based in jurisdictions with strict customer protection regulations and have backup controls and guarantees on the reliability of their third-party payment infrastructure. Furthermore, they disclose detailed risk information to their users through their interfaces.
Download the full report as a free PDF from the Cointelegraph Research Terminal.
To achieve true mass adoption, cryptocurrency must be integrated into the regulatory framework. This does not mean abandoning the principles of decentralization and privacy, but finding a balance where these principles can coexist with legal and financial protections.
Transparency and compliance with regulations, especially those aimed at protecting customers, will increase trust among users and open opportunities for institutional investors and companies to enter the crypto space. The crypto community should strive to create an ecosystem where the benefits of cryptocurrency are available to all, reducing fraud, money laundering, and poor business practices that can threaten personal cryptocurrency savings.
The opinions expressed in this article are for general information purposes only and are not intended to constitute advice or recommendations for any person or for any specific security or investment product.
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