How to Vet Whether an Exchange Is Safe: 7 Checks

No exchange is 100% safe, but there's "more reliable" and "more suspicious." These 7 checks help you do due diligence before signing up.

1. Proof of reserves\nDoes it publish proof of reserves, ideally with proof of liabilities, third-party audit and regular updates. Having it > not.

2. Licensing\nDoes it hold relevant licenses/registrations in major jurisdictions (e.g. US MSB, EU MiCA, Japan FSA, Hong Kong SFC). Regulation isn't absolute safety, but it's another layer of accountability.

3. Track record\nHow long it's operated, and whether it survived full bull-bear cycles without incident. Longevity is itself a filter.

4. Insurance fund\nWhether it maintains an insurance/compensation fund for extreme losses (like the SAFU-style funds at some majors), with a disclosed size.

5. Smooth withdrawals\nThe most concrete live test: do small withdrawals clear instantly, or get delayed on various pretexts? Slowing withdrawals are often the earliest danger sign.

6. Cold-wallet ratio and security record\nWhether most assets sit in cold storage, plus any hack history and how it was handled. How it handled past incidents is more telling than claiming "never hacked."

7. Transparency\nIs the team public, disclosure adequate, and are there opaque related-party dealings? The less transparent, the more cautious you should be.

How to use this checklist\nNo exchange scores full marks — the point is to compare and favor majors meeting more criteria. Our exchange comparison and compare pages organize basic info on major venues as a starting point; once chosen, factor in cost with the rebate calculator.

Remember: even a safe exchange is just a "trading rail"\nPassing these 7 only means it's relatively reliable — large long-term holdings should still be self-custodied.

Keep reading\nProof of reserves, is crypto safe on an exchange, choosing an exchange