There are nearly 600 cryptocurrency exchanges worldwide inviting investors to trade bitcoin, ethereum and other digital assets. But costs, quality and safety vary widely. With an emphasis on regulatory compliance, here is Forbes Digital Assets ranking of the top 60.
By Javier Paz, Director of Data & Analytics
Editorial contributors: Nina Bambysheva, Michael del Castillo, Steven Ehrlich, Matt Schifrin
While blockchain technology is being embraced by corporations around the world (see Forbes Blockchain 50) there has likewise been a boom in outfits that allow investors to buy, sell and store cryptocurrencies. Despite the sector being little more than a decade old, CoinGecko.com reports that there are no fewer than 580 independent crypto exchanges allowing investors to trade virtual currencies. In fact, in the last quarter of 2021, websites of dedicated crypto exchanges received 1.7 billion visits according to SimilarWeb data collected by Forbes.
For uninitiated crypto investors, distinguishing quality providers from those that appear to be reputable because of a slick website or famous spokesperson, is nearly impossible. Even exchanges with heavy trading volume in a particular cryptocurrency or pair of cryptos, is a faulty indicator of quality, because in an environment teeming with unregulated providers, it is relatively easy for exchanges to simply report fake numbers.
To help investors navigate the world of buying and selling bitcoin, ethereum and other cryptocurrencies, Forbes Digital Assets analyzed 60 of the largest crypto exchanges ranking them according to ten different criteria (see Ranking Methodology below) ranging from cyber-security provisions and trading fees to institutional backing and regulatory compliance, which we weighted more heavily. At the start of January, the 60 exchanges on our list were generating more than $100 billion in trading volume per day, representing the majority of crypto trading volume globally.
Ten of the exchanges on our list, names like Coinbase, Gemini, Kraken and FTX.US, are most compliant from a regulatory standpoint and thus considered “Class A” according to our survey. Fourteen of the firms we analyzed— companies like PayPal, Robinhood and Block— offer crypto trading, but it isn’t their main business. We dubbed these firms Class B firms. Class C firms are regulated at the national or regional level like Korea’s Coinone, Singapore’s Luno and Mexico’s Bitso. Two larger firms that fall into Class C are FTX and Binance because they are not yet as well regulated as Class A exchanges. Class D exchanges, according to our survey, have websites with legal agreements and registrations in places like the Seychelles and Hong Kong that convey to visitors the sense that these firms are regulated, but business registration is not the same as regulatory compliance. We consider Class D firms like Bitfinex, Kucoin and Gate.io to be largely unregulated.
Unlike traditional financial services, the crypto exchange industry generally lacks standards to certify a new entity before or after they start soliciting client funds. In the United States there is no member organization like FINRA to self-regulate crypto-exchanges despite the fact that from a customer standpoint these exchanges function very similarly to broker-dealers like E-Trade or Schwab. To our knowledge, only Japan has a self-regulating industry group that checks a firm’s basic governance, operational competence, and ensures exchange officials or owners are not individuals with a history of misdeeds or even criminal records. For this reason, our new global ranking puts a heavy weighting on regulatory compliance.
One reason that there are more than 600 crypto exchanges has to do with the industry’s low barriers to entry. There are numerous white-label technology firms around the world like Cyprus-based B2Broker, New York City’s Alphapoint, and London’s GCEX that offer aspiring entrepreneurs the software and data needed to get started with a cryptocurrency exchange. Sometimes the cost for such software is no more than $5,000 a month. The administrative part of any new crypto exchange launch – the website, the legal set up, and the financial connections tend to be a minor cost. Sometimes companies need to do little more than register the business in a small island country such as Saint Kitts or Samoa, and hope that they manage to steer clear of regulators like the SEC and the CFTC.
Another potential trap for investors is relying on the “trust scores” or “exchange scores” on popular price and data sites like CoinMarketCap and CoinGecko.com. These websites are often compensated for the customers they generate via links to crypto exchanges, so these so-called rankings often involve minimal vetting from a quality and safety standpoint.
To get in-depth research, interviews, trading signals and other valuable information unavailable anywhere else subscribe to Forbes CryptoAsset & Blockchain Advisor.
Forbes Crypto Exchange Global Rankings – Top 10 Providers
SCROLL RIGHT TO SEE THE FULL TABLE
#1 | Coinbase: Coinbase is the largest cryptocurrency exchange in the U.S.; it went public on Nasdaq via an $86 billion direct listing, the biggest in history. It is regulated by the New York DFS with a virtual currency license, serves 44 U.S. states, and has a N.Y. state banking charter. It offers the largest number of coins and markets among U.S. crypto exchanges and is launching an NFT marketplace and derivatives service.
#2 | Kraken: Regulated in the U.S., U.K. and select Asian Pacific jurisdictions, U.S.-based Kraken caters toward intermediate and advanced crypto traders. It serves all U.S. states except for New York and Washington state, and it has a banking license from the state of Wyoming though it has not launched operations. It recently provided a proof of reserves for $19 billion of client assets, one of the only exchanges in history to do so. It has 13 different licenses globally, and has stated plans for an IPO this year. Its fees at 16 basis point for makers are lower than those of other large regulated firms. It is the only Class A firm with a futures exchange.
#3 | Robinhood: Robinhood is a publicly-traded, U.S. based, and SEC-regulated broker dealer offering commission-free crypto and stock trading. It offers a relatively low number of assets for trading (7) compared to most dedicated crypto exchanges. The firm has more than two million clients on a waiting list to get a wallet that sends crypto to external addresses. The low cost of entry and simple offering makes it suitable for beginners. Crypto assets under custody are very high at $22 billion.
#4 | Crypto.com: Singapore-based, U.S.-regulated Crypto.com paid $700 million for the naming rights to the former Staples Center in Los Angeles. It trades 169 coins and offers 349 trading pairs. Crypto.com has a higher trading volume than Coinbase despite its relatively expensive 40 basis point fee for entry-level trades.
#5 | FTX: Fast-growing FTX (valued at $32 billion) led by 29-year old wunderkind Sam Bankman-Fried has quickly become one of the largest exchanges in the world by volume, largely by tapping the crypto derivatives market. It already owns regulated entities in the U.S. and Japan and operates in 100+ countries around the world. Tom Brady, Stephen Curry, Gisele Bundchen, David Ortiz, and Kevin O’Leary are paid endorsers.
#6 | Binance: Binance, the world’s largest cryptocurrency exchange by reported volume, offers clients massive breadth of crypto pairs – more than 1600 – across spot, derivatives, and DeFi markets. Most of Binance’s volume is in bitcoin and ether perpetual futures. Binance’s recently announced Bahrain crypto asset service provider license indicates that the giant firm is taking steps in the right direction in terms of regulatory compliance. In 2021 the firm reportedly experienced multiple regulatory inquiries regarding its anti-money-laundering program.
#7 | Huobi Global: Founded in 2013 in China, Huobi caters towards intermediate and advanced traders. Aside from offering spot markets for 200+ assets, the firm also provides derivatives, margin services, an OTC desk, and prime brokerage. It has faced accusations of wash trading. It closed all China business in 2021 and now runs its operations out of Singapore. It is regulated in Japan, Gibraltar, and Luxembourg.
#8 | Gemini: Founded by the Winklevoss brothers in 2013, Gemini is a U.S.-based and regulated crypto exchange that heavily leans into its image promoting regulatory compliance. It also owns the NFT platform Nifty Gateway. The firm raised $400 million from Morgan Creek Digital in November 2021 at a $7.1 billion valuation. Its fees are middle of the pack, though the number of coins and markets is a bit below average.
#9 | GMO Coin: One of the largest Japanese crypto exchanges, GMO Coin offers one of the lowest trade costs in the industry at -1 basis point for makers and 5bp for takers (in Japanese yen) across 9 crypto pairs. Parent company GMO Internet Group owns also the largest retail FX brokerage firm in the world, GMO Click Securities.
#10 | eTORO: eToro is a globally-regulated firm with a $9.6 billion valuation that offers multi-asset trading to more than 1.5 million clients and 19 million users. It is regulated in Europe, the U.S., and other areas. Its spreads for retail clients are very high (they go from 75 basis points to 490bp depending on the crypto), but its unit eToroX has a low fee of 5 basis points per trade.
Forbes Crypto Exchange Global Rankings – 11 to 20
SCROLL RIGHT TO SEE THE FULL TABLE
#11 | Interactive Brokers: Interactive Brokers is a U.S.-based and globally regulated broker dealer firm offering many asset classes, including crypto, to a sophisticated client base. Its trade cost (18 basis points) is among the lowest, though its crypto offer is still limited. Great choice for multi-asset class traders.
#12 | IG: IG Group is a big name in making financial derivatives available to a sophisticated global retail audience, with thousands of tradable securities including a small crypto offering. In the U.S., its unit tastytrade offers futures and options for both bitcoin and ethereum at low rates. The crypto CFD (contract for difference) service offered to non-U.S. clients is low among CFD firms at 50bp, but pricey compared to crypto spot firms.
#13 | Bithumb: One of Korea’s ‘big four’ regulated exchanges, Bithumb offers more than 250 trading pairs with a trading fee of 20 basis points for makers and 25 bp for takers; and most liquidity is denominated in Korean won (KRW). Unaffiliated banking and technology firms have vetted Bithumb’s cyber security and regulatory compliance practices.
#14 | Plus500: Plus500 is a U.K.-listed, globally-regulated brokerage firm that offers contracts for difference (CFDs) across various asset classes, like stocks, indices, FX, and also ten crypto markets. A big sports sponsor globally, it is a close competitor of IG and eToro. The leveraged nature of CFDs makes them risky, not offered in the United States.
#15 | KuCoin: Boasting a robust coin offering (over 500) and low fees, KuCoin is one of the world’s biggest cryptocurrency exchanges. In 2020, it suffered one of the largest exchange heists when hackers stole more than $275 million worth of cryptocurrency, though almost all stolen coins were later recovered. Seychelles-based KuCoin is not a regulated exchange and is not licensed to serve U.S. customers.
#16 | CME Group: CME Group is a 100-year old U.S.-based derivatives exchange that launched its bitcoin futures service in late 2017 and now has 4 crypto futures contracts (including ether futures, micro bitcoin futures, micro ether futures) and two crypto options contracts that derivatives-trained traders can access through accounts at futures commodity merchants (FCMs).
#17 | bitFlyer: One of Japan’s largest crypto exchanges, bitFlyer is regulated in Japan, the U.S., and Europe. It restricts its offering to bitcoin and particularly bitcoin against the yen (BTC/JPY), available at a fee of 15 basis points for makers and takers.
#18 | FTX.US: The U.S. affiliate of its namesake firm, FTX.US is quickly gaining traction in the U.S. market despite its relatively limited spot market offering (26 coins). It recently purchased the CFTC-regulated derivatives provider LedgerX and launched an NFT marketplace.
#19 | CEX.IO: CEX.IO is a U.K.-based cryptocurrency exchange founded in 2013 is regulated in the U.K., continental Europe, United States, and Canada. Though primarily-retail focused, CEX.IO is now moving into the institutional space with prime broker services, margin trading, and APIs. It offers 100+ assets for trading.
#20 | CashApp: Square Inc’s CashApp launched crypto service to its now 30 million monthly active users back in 2017. It is limited to bitcoin and comes at high rates ranging from 75 basis points (bp) to 300 bp, suitable fees for beginners. CashApp supports payments to external crypto wallets.
Forbes Crypto Exchange Global Rankings – 21 to 30
SCROLL RIGHT TO SEE THE FULL TABLE
#21 | SoFi: SoFi is a U.S.-based and regulated firm offering multi-asset investing including stocks, exchange traded funds, and 30 cryptocurrencies. The crypto trade fee of 125 basis points is steep and it does not offer external wallet, making it suitable only for beginners.
#22| OKX: Formerly known as OKEx, OKX is a Seychelles-based unregulated exchange. It’s low fees, high staking yields, and vast product choice have been its main areas of appeal. It does not serve U.S. clients. In 2020 it underwent a withdrawal lockdown for six weeks when a private keyholder was arrested and the firm had no other contingency plan in place for that kind of situation.
#23 | Blockchain.com: The firm has raised $537 million from venture capital firms giving it a $5.2 billion valuation. Blockchain.com is a U.S.-registered entity, based in Miami and regulated in select U.S. states. It touts 37 million wallet users and its fees are average among its class A peers.
#24 | Upbit: One of the largest Korea-based crypto exchanges, it is also regulated in Thailand, Indonesia, and Singapore. It has more than 8 million clients and trades an average of $4 billion daily, most of it denominated in Korean won (KRW); its coin offering is high.
#25 | Gate.io: Gate.io is an unregulated exchange with the highest coins (1200+) and trading pairs (2200+) offering available; it claims to process $12+ billion in trading volume daily. The exchange offers spot, margin and derivatives trading in addition to crypto lending and liquidity mining, among other products and services. It does not serve U.S. clients.
#26 | Bitbank: Founded in 2015, Bitbank is one of the top cryptocurrency exchanges in Japan by trading volume. The exchange offers 13 trading tokens against major crypto and the Japanese yen (JPY). It is domestically focused, operating only with Japanese yen fiat deposit onramps; international corporate accounts may be accepted.
#27 | Liquid: Japan-based Liquid and its Quoine subsidiary were purchased by FTX in February 2022, giving the latter licenses to operate legally in Japan and Singapore. Liquid exchange was hacked for $97 million worth of crypto in August 2019.
#28 | PayPal: Globally-known payment services PayPal and subsidiary Venmo provide crypto services to its more than 400 million active users. The firm’s crypto offering is limited to bitcoin, ethereum, litecoin, and bitcoin cash and carries a high fee which makes it acceptable for beginners.
#29 | Bitstamp: Bitstamp is headquartered in the U.K. and its U.S. affiliate is regulated in the U.S. by the New York Department of Financial Services. It offers 53 coins and 134 markets, while its fees starting at 50 basis points are high compared to class-A peers.
#30 | Bittrex: U.S.-based exchange founded in 2014. Offers trading markets for more than 800 crypto assets and tokenized stocks. It recently launched an initial exchange offering platform, Bittrex Global Starting Block, to help new tokens bootstrap liquidity with its built-in user base.
Forbes Crypto Exchange Global Rankings – 31 to 40
SCROLL RIGHT TO SEE THE FULL TABLE
#31 | Bybit: Bybit offers a wide range of advanced trading tools for experienced traders with leverage up to 100 times. It doesn’t charge withdrawal or deposit fees, but each transfer comes with a fixed miner’s fee regardless of the trade amount. The platform is not available in the U.S., but since 2020 it is registered with FinCEN and most U.S. states as a money transmitter entity.
#32 | Bitfinex: Bitfinex is an unregulated exchange owned by iFinex, parent company of Tether, the world’s largest stablecoin. In August 2016, hackers breached the exchange’s security system and stole roughly 120,000 bitcoins from its customers, worth roughly $70 million at the time and more than $4 billion at current prices. It is not regulated in the U.S.
#33 | Binance.US: Binance.US is BAM Trading Services, an entity that leases technology from Binance and whose majority owner is Binance’s CEO Changpeng Zhao. BAM has money transmitter entity licenses with FinCEN and most U.S. states. The product offering from Binance.US spans 72 coins and 158 markets, and it offers low fees.
#34 | TradeStation: Tradestation is a U.S.-based and regulated broker dealer firm (owned by Japanese financial conglomerate Monex Group), with a multi-asset offering including 5 cryptocurrrencies. Its trading platform is particularly powerful and suitable for advanced traders although its 30 basis point fee is average.
#35 | Lbank: Lbank is a high-traffic, product-rich crypto exchange of unknown origin that conducts its activities without regulatory oversight. The firm’s clients tend to come from emerging markets like Argentina, and does not accept U.S. or mainland China clients.
#36 | Coincheck: Coincheck is a Japanese crypto exchange owned by the Monex Group, which offers yen-based trading pairs against 17 different crypto assets. They also have an NFT marketplace in beta and offer bill pay and lending services. In 2018, it suffered one of the largest hacks in history, losing $530 million worth of funds.
#37 | Indodax: Indodax is Indonesia’s largest regulated exchange with as many as 5 million clients. It offers almost 200 spot crypto markets denominated in Indonesian rupiah (IDR) plus IDR crypto derivatives and DeFi markets.
#38 | BitPanda: Retail-focused Austria-based Bitpanda became the country’s first unicorn in March 2021 with a valuation of $4.1 billion, supported in part by U.S. tech billionaire Peter Thiel. It offers trading services across 50+ crypto assets as well as stocks, ETFs, and precious metals. It also licenses its proprietary solutions to banks and other fintechs.
#39 | Bitso: One of largest cryptocurrency exchange in Latin American, Mexican-based Bitso offers trading pairs against 22 different cryptocurrencies. The exchange is also rolling out a rewards program and international payments service. It does not serve U.S. clients.
#40 | ErisX: Chicago-based and CFTC-regulated ErisX offers spot and futures crypto contracts to both institutional firms and retail clients, some of whom invest in crypto via self-directed retirement accounts. ErisX offers free trading to spot price makers and crypto futures – only FCM fee applies. It made a deal to be acquired by the Cboe in late 2021 and will become Cboe Digital once the deal closes.
Forbes Crypto Exchange Global Rankings – 41 to 50
SCROLL RIGHT TO SEE THE FULL TABLE
#41 | LMAX Digital: LMAX Digital is a Gibraltar-based and regulated spot crypto exchange serving an audience of high-end, sophisticated retail investors and institutional firms. It offers five coins and 19 trading pairs; the firm is known for its trading technology and quality of execution, while its liquidity is steady and its maker/taker fees (2 basis points and 6bp) are very low.
#42 | itBit: itBit, a U.S.-based and regulated exchange offering spot trading in nine cryptocurrencies at low rates for both retail and institutional clients. itBit is owned by Paxos, an entity regulated as a U.S. bank, creator of the PAX dollar (USDP, a major stablecoin), and a crypto technology provider to the likes of PayPal, Interactive Brokers, and Revolut.
#43 | Phemex: Phemex is an exchange registered in Singapore under a provisional license – Singapore does not yet have crypto exchange regulations. Phemex offers 53 spot crypto but most of its trading comes from BTC and ETH perpetual contracts. It offers among the lowest of fees (-2.5 bp) for crypto derivatives price makers.
#44 | Coinone: One of the ‘big four’ South Korean exchanges that successfully underwent IT and regulatory compliance validations from external parties, Coinone offers trading pairs against 192 digital assets. Due to regulatory pressure as of January 24th the exchange is no longer allowing users to withdraw funds to unverified wallets.
#45 | AscendEX: AscendEx is a Singapore-based unregulated crypto exchange offering more than 300 USDT spot crypto markets, plus dozens of USDT crypto derivatives markets; fees are low, no U.S. or mainland China clients allowed.
#46 | Korbit: One of the ‘big four’ South Korean exchanges, Korbit offers trading pairs against 83 different cryptocurrencies. Owned by gaming giant Nexon, Korbit was the first South Korean exchange to launch an NFT marketplace.
#47 | Luno: London-based Luno was acquired by Barry Silbert’s Digital Currency Group in 2020. The company has primarily focused on serving emerging markets across Africa and Asia. The retail-focused service currently offers trading in bitcoin and ethereum.
#48 | XT.com: Registered in the Seychelles in 2018 and based in Singapore, XT.com is an unregulated crypto exchange offering more than 300 spot crypto markets and low fees, as well as crypto futures in more than 40 markets and staking. It is not authorized to serve to U.S. residents.
#49 | BTCTurk: BTCTurk is a Turkey-based exchange claiming a 2013 launch. Its BtcTurk Pro service caters to a Turkish audience, with more than 100 Turkish lira-denominated crypto markets in offer. This firm is not regulated and does not take U.S. clients.
#50 | Invest Voyager: Publicly-traded crypto exchange based in Canada that offers fee-free trading across 80+ crypto assets, although the company generates revenues from spreads. It also offers a Mastercard debit card to let users spend crypto and offers yields of up to 12% on 36 assets on the platform.
Forbes Crypto Exchange Global Rankings – 51 to 60
SCROLL RIGHT TO SEE THE FULL TABLE
#51 | HitBTC: Registered in the British Virgin Islands in 2013 and based in Chile, HitBTC is an unregulated exchange with a large product offer across crypto spot and derivatives markets. The firm does not serve U.S. clients.
#52 | BitMEX: BitMEX is an unregulated crypto exchange based in the Seychelles that pioneered perpetual futures contracts. These contracts, offered at low fees, are the firm’s main appeal. In 2021 U.S. regulators took issue with BitMEX’s AML program and required the exchange to pay a $100 million penalty. The firm has plans to become regulated down the road and its new CEO just acquired a German bank.
#53 | OKCoin: U.S.-based OKCoin serves retail and institutional investors across more than 190 countries and territories. Retail users can buy over 50 different cryptocurrencies with multiple fiat currencies and earn yield with Earn, OKCoin’s DeFi and staking feature.
#54 | Zaif: One of Japan’s first licensed cryptocurrency exchanges, Zaif emerged soon after the infamous collapse of another Japanese bitcoin exchange Mt. Gox. The platform lists very few assets but charges low fees.
#55 | Poloniex: A Panama-based, unregulated exchange that offers a large number of tokens and coins, at a low (14bp) fee. It originally came to prominence during the ICO craze of 2017-2018. Poloniex was subsequently purchased by Circle, a primary issuer of the USDC stable coin, for $400 million in 2018. Currently owned in part by the creator of the Tron blockchain, Justin Sun. In August 2021, Poloniex agreed to pay a $10 million no-fault settlement to the SEC for operating an unregistered exchange.
#56 | Mercado Bitcoin: MercadoBitcoin.com.br is arguably Brazil’s largest crypto exchange and (along with Bitso) one Latin America’s largest. The firm is registered in Brazil but the country still lacks a crypto regulatory framework. It offers a few dozen cryptocurrencies, defi tokens, utility tokens, fan tokens and other tokenized digital assets.
#57 | Deribit: Panama-based Deribit launched in 2016 as an offshore crypto derivatives exchange with a big focus on crypto options – it generates more than $5 billion in crypto option volume daily which is the highest by far. Despite lacking regulatory credentials, the firm has a robust following made up of sophisticated retail and institutional traders. Low fees.
#58 | Bibox: Bibox is an Estonia-registered firm with limited (anti-money-laundering) license from an authorized Swiss entity, but it is not regulated as a crypto exchange. It reportedly has more than 10 million users; its offering includes more than 400 markets, defi mining, ‘grid trading’, and crypto derivatives.
#59 | ZB.com: This Samoa-based unregulated exchange touts a history tracing back to 2013 in China, and web traffic shows most visitors originate from India, China, and other emerging markets. It is not registered to serve U.S. clients. It supports 80 spot crypto assets, as well as derivatives and margin trading.
#60 | CoinZoom: Utah-based CoinZoom is registered in all 50 U.S. states and territories. The exchange offers features for both novice and seasoned traders trading more than 70 spot crypto pairs as well as card services. Fees typically start at 36 basis points, which is about average for regulated U.S. entities.
Ranking Methodology
Our ranking methodology employs 10-categories each with a maximum of 3 points and a minimum of zero. Two categories, regulation and popularity, received double-weighting – i.e., a maximum of 6 points each. The regulatory boost is a way to normalize the scale because regulated entities bear additional costs for the sake of being more accountable to the investing public, something that they don’t get sufficient credit for in most cases. Our ‘popularity’ boost is simply an acknowledgement that firms with a certain scale have established a strong track record attracting and onboarding a larger segment of the investing public than their peers.
RANKING CRITERIA
Jurisdiction: The choice of jurisdiction, or place where an organization operates, can make it hard or impractical for aggrieved investors to defend their interests. Jurisdictions like Germany, Japan, or the United States rank highest (a 3 score) while those in Seychelles or tax havens rank lowest (0).
Regulation: As a preliminary step, we generated our own Regulator Difficulty Score (RDS) by assigning a 1-to-3 value (3 being strictest) for each regulator. Some firms were not regulated and had a zero, while others had as many as 9 jurisdictions where they were regulated. To calculate a firm’s regulated entity score (RES), we assigned the applicable RDS points to each regulated entity a firm worked with. For example, our score for an entity registered as a U.S. money services business is 1 point. Conversely, a firm would get three points if it was a U.S. SEC-regulated brokerage or a CFTC regulated entity, and six points if it were regulated by both. The final step was to give the firm a 0 to a 3 for the regulation category. We determined that firms with a RES of 5 or higher got a 3, a 3-to-4 RES score got them a 2, and a 1-to-2 RES score got them a 1.
Institutional: The more money an entity raises from recognized institutional investors, the more likely that these savvy investors received concrete covenants that protected their investment, and the more likely the firm enacted sound internal controls after the investment. A 3 score in the category signifies the firm is publicly traded or has done credible investment rounds, a 2 score means smaller sum of outside investment or less known investors, a 1 score could be having an active institutional trading desk or having an API that several institutional trading firms are using.
Product: For this category, we primarily consider crypto product choice. Less than 50 markets offered gets a zero, 50 to 199 markets gets a 1, 200 to 499 markets gets a 2, 500 or more markets gets a 3. We also make a special accommodation in our scoring for entities that give investors the ability to invest in multiple asset classes from the same platform and those that let clients invest in both spot and derivatives crypto markets.
Volume: Generally, a high trading volume reflects greater liquidity and support from the trading community. Few areas are more subject to fake statistics as trading volume has been, however. We take at face value volume from regulated entities and discount volume from unregulated firms. The first step to calculate a volume score is to generate an adjusted total volume (ATV) – adjusted for overstated volume. We subsequently calculate a firm’s share of the ATV and rank it as follow: a 2.5% or higher = 3, a 0.5% to 2.4% = 2, a 0.1% to 0.4% = 1, less than 0.1% or unknown = 0.
Popularity: We capture a firm’s historical number of unduplicated visitors across platforms (mobile + desktop) using a service like SimilarWeb and generate an average using the three most recent months. Using this average, the scale for this category is as follows: 3: Two or more million unique visitors monthly; 2: Between 1.0 and 1.99 million unique visitors monthly; 1: Between 0.25 million and 0.99 million unique visitors monthly; 0: Less than 0.25 million unique visitors monthly.
Client Reviews: We consider the app ratings and comments at Google Play, Apple App store, and site reviews at places like TrustPilot to determine customer satisfaction. This effort is both qualitative and quantitative, subject to Forbes interpretation.
Client Funds: We use the client asset estimates of Cer.Live and complement that info with credible public information and data directly from the firm in question; client assets are defined as the summation of the current value of all custodied client assets in USD millions and as of the latest available date, in this case Dec 31, 2021. Our ranking goes as follows: More than $1 billion = 3, $200 million to $999 million = 2, $30 million to 199 million = 1, less than $30 million = 0. In a few instances where Cer.live lacks a value for a large firm, Forbes generates its own estimate.
Cybersecurity: We use the cybersecurity results of Cer.Live and augment that info with credible public information and direct disclosures from exchanges. A Cer.live score of 8-to-10 = 3, a 5-to-7.9 score = 2, a 3-to-4.9 score = 1, a score below 3 = 0.
Low Fee Leader: We capture fee information from exchange websites and use a scenario of a new trader buying $10,000 in bitcoin at the published rates. This category’s scoring is measured in basis points (100 basis points = 1%) based on the highest price maker and price taker fee offered, as follows: 3. Up to 9 basis points, 2. 10bp to 19bp; 1. 20bp to 35bp; 0. More than 35bp.
Key Metrics
The ranking process was as quantitatively driven as possible, drawing data from multiple reliable sources. We summarize below key metrics about each firm that our readers may find useful to inform their crypto provider choice.
FORBES Q1 2022 METRICS – TOP 20 FIRMS
SCROLL RIGHT TO SEE THE FULL TABLE
FORBES Q1 2022 METRICS – FIRMS 21 to 40
SCROLL RIGHT TO SEE THE FULL TABLE
FORBES Q1 2022 METRICS – FIRMS 41 to 60
SCROLL RIGHT TO SEE THE FULL TABLE
I. Provider Classification
One of the key objectives of our study was to divide crypto exchanges into cohorts to conduct more refined analysis. We ended up splitting the 60 companies into four groups. Class A consists of the most global, regulated, and well capitalized firms, while Class B firms are non-crypto-native financial institutions, Class C are regulated crypto exchanges in particular countries or regions, and class D firms tend to be unregulated or lightly regulated crypto exchanges.
FORBES CLASSIFICATION OF THE CRYPTO RETAIL INVESTING SPACE
It stands to reason that firms required to meet regulations tend to grow at a slower rate than those that don’t make those kinds of investments.
Before Class A firms list a new token, they have to hire costly experts to assess pros and cons of listing a new asset in the current uncertain regulatory climate. Class A firms also rent office space in expensive financial districts, hire qualified personnel for compliance, retain transaction monitoring software like those of Chainalysis and Elliptic and run up a considerable professional services bill. Their sites have lots of risk disclosures and have prudent marketing. Having no such requirements, Class D firms can allocate more resources at marketing and customer acquisition. That extra share of budget not dedicated to compliance can help Class D firms offer an attractive compensation to a small army of affiliate partners – think of these as independent contractors who can create many web pages and promises of high returns – who drive more traffic to Class D websites.
The lion’s share (41.6%) of all trading volume done in our group of 60 firms is reportedly executed by Binance, a class C exchange. This kind of concentration is unusual but it is reflective of the popularity of crypto derivatives – almost half of all Binance trading volume comes from five such contracts, called perpetual futures. The trading volume of Class D exchanges – approximately 34% of the group’s total – was also high and this was true even after we discounted by 25% all volume from firms domiciled in tax haven locations. From conversations with the CEO of a large crypto data aggregator, our study confirmed that little impedes any crypto exchange from overstating its trading volume to boost their importance at places like CoinMarketCap.com and coingecko.com. To help address the widespread fake volume in the industry, specialist entities like CoinMetrics and others publish reports that illustrate the problem.
CRYPTO FIRM CLASS CHARACTERISTICS
Another important observation from our classification study is that Class A exchanges published prices for about 215 markets – a market is the name given to trading pairs like bitcoin/tether (BTC/USDT) or ethereum/bitcoin (ETH/BTC) – compared to 299 markets published by Class C exchanges and 487 markets by Class D exchanges. The same is true for the average number of coins offered. This phenomenon may be due to lack of regulatory oversight and rampant marketing of new, unproven assets by Class D exchanges while Class A exchanges tend to consult with attorneys and regulators before (responsibly) listing new assets. Class B firms only operate with one to 20 cryptocurrencies, with few exceptions.
Not including Binance, Class C exchanges get only a 7% share of global visits to websites of retail crypto investment providers and they capture a 10% share of estimated trading volume. With Binance, this class gets 47% of all traffic to crypto exchanges and 52% of all volume. Meanwhile, Class B firms have hundreds of millions of clients that may not have entered the crypto market, and this class could be the one that stands to gain handsomely from that introduction when prices start to rise again from the current crypto winter.
Estimating the size of a market that is fast growing and thrives in opacity is more art than science. Forbes estimates that the unduplicated number of unique visitors coming monthly to crypto exchanges (Classes A, C, and D) stood at 100 million as of January 2022, while the total visitors to Class B sites was 208 million. We should note that for our analysis we only counted what we believe are 17 large Class D firms. There are several hundred Class D firms globally – usually very small though one usually can’t tell by looking at a website. In fact, many Class D exchange websites may be out of business but remain up to dupe new investors who don’t know the signs of a zombie crypto exchange.
II. Geography of Crypto Providers
Our study was able to ascertain that there are millions of crypto traders in various countries globally, including but not limited to the United States, South Korea, Japan, Russia, Brazil, Indonesia, Turkey, Mexico, India, and Germany. The sixty firms offering crypto investing to retail audiences in our study received a total of 3.92 billion visits during the last quarter of 2021. The location of where the crypto firm registered as its headquarters (or what domicile the firm listed within its Terms of Service document) is what we used to create the tables below and answer questions such as: “What are the geographic areas that crypto exchanges use as base of operations?” and “how significant is the crypto business that originates from firms located in these geographic areas?”
GEO DISTRIBUTION OF CRYPTO PROVIDERS
The geographic distribution of crypto activity globally showed that about a third of these firms made the United States its home or its main area of business, compared to 38% that made tax haven locations their home. Tax haven-based exchanges captured 34% of visits to crypto service provider sites, and approximately 86% of global trading volume.
It’s worth noting that there can be obfuscation employed by crypto exchanges that are domiciled in a well-known jurisdiction, but it so happens that this locality forbids crypto. Such is the case with Binance, OKX, Bitfinex, and Lbank that list Hong Kong as their domicile in their Terms of Service document. And indeed, they may have business entities registered in Hong Kong, but again registration is not regulation. Hong Kong regulatory licenses – Type 1, 7, and 9 – issued by the Hong Kong SEC are not easy to obtain. Lots happened in mainland China and Hong Kong in 2021, and neither Hong Kong nor the mainland sanction or regulate crypto trading or mining today. This means that if a client of these firms were to take the firm to court in Hong Kong (per the Terms of Use instructions), the answer from the courts could well be that they (the courts) have no jurisdiction or interest in those matters because they don’t sanction crypto investing and don’t regulate those firms.
REGULATORS IN THE ASIA PACIFIC REGION
South Korean regulators issued challenging crypto rules that went in effect in 2021 and led to a consolidation from almost 100 exchanges based there to only four with active licenses presently – see below. These regulations required exchanges to pass stringent technology licensing by expert firms in that field and also get one bank sponsorship where the crypto exchange was shown to have suitable methods to track individuals’ identities and tax commitments.
CRYPTO PROVIDERS REGISTERED IN SOUTH KOREA
SCROLL RIGHT TO SEE THE FULL TABLE
Japan’s approach to crypto regulation since the hack of two prominent crypto exchanges in 2018 – Coincheck and Zaif – has been to encourage the creation of a self-regulating entity, which now has 40 members and sets membership criterion on matters such as safety of hot wallets. The following list of crypto providers in Japan is set to grow as more of these providers are added.
CRYPTO PROVIDERS REGISTERED IN JAPAN
SCROLL RIGHT TO SEE THE FULL TABLE
Various European regulators have passed rules governing crypto as a virtual currency service which focuses on anti-money laundering (AML) provisions, following the adoption of the 5th AML Directive on January 2020 which required crypto exchanges and custodian wallet providers to be licensed or registered by every single national authority in the European Union.
Germany’s Bafin is seeking public comment on its intention to ban futures contracts that leave investors owing more money than what they invested initially. Considering that much of crypto trading volume occurs in perpetual futures, which in theory can leave investors on the hook for losses beyond what they initially invested, Forbes reached out to Bafin to clarify its position whether these types of contracts would likely be banned. Bafin clarified that both the crypto exchange provider and crypto contract have to go through tests to determine whether they are exempt from these proposed regulations and need to comply with them.
REGULATORS IN THE AMERICAS AND EUROPE
The U.S. crypto regulatory scene is evolving, with regulators taking on different and sometimes overlapping responsibilities.
- Securities regulators. The SEC and its enforcement arm FINRA are working diligently to draft what will no doubt be comprehensive regulations to license crypto exchanges nationally.
- Futures regulators. There are no immediate new regulations that we know of from futures markets regulators – the CFTC and its enforcement arm the National Futures Association – but this might change in light of proposed SEC crypto regulation and how firms regulated by the CFTC evolve (i.e., cases such as FTX.US wanting to offer crypto spots, various kinds of futures, and equities under the same account). And then there is the issue of existing rules that allow for the operation of exchanges offering bitcoin and ethereum futures because they are considered commodities.
- U.S. States and Banking regulators. Separately, U.S. states and select banking regulators also have regulations that effectively authorize crypto exchanges to operate as money transmitter entities (MTE), state chartered banks, virtual currency firms, and banks under a federal charter. Crypto exchanges have also registered with Financial Crimes Enforcement Network (FinCen) to certify their compliance with AML requirements. With the onset of nonfungible tokens (NFTs) and defi exchanges, among other things, and both the SEC and Congress keen on passing regulation of the crypto space, the last word on U.S. crypto regulation has not been said.
CRYPTO PROVIDERS REGISTERED IN THE UNITED STATES
SCROLL RIGHT TO SEE THE FULL TABLE
The SEC plans to regulate digital assets will considerably increase the cost to remain a U.S.-regulated firm operating under money transmitter entity (MTE) licenses. Some of them will choose to exit the U.S. market, and consolidation will start to take place. Firms that are already accustomed to regulation, such as SEC-regulated broker dealers, will hold an edge over the small and midsize crypto exchanges.
III. “How To” Of Crypto Provider Due Diligence
We close our report with a few actionable tips for prudent investors new to crypto to help them identify warning signs and the right service provider.
- Forbes Rankings. The Forbes Crypto Exchange Global Ranking pages will continuously reflect the latest information on a large number of crypto providers, so keep referring to it.
- Look for signs of regulation. Firms that are regulated can be spotted in a few ways:
• They generally have risk disclosures and regulatory information at the bottom of the homepage
• Look at the “Terms of Service” page on the website and identify where the firm is domiciled – this page is sometimes referred to as “Terms”, “Terms of Use”, “Legal”, and “User Agreement”
• Look at the About Us page to see if they indicate where the firm operates and if it’s regulated
• If you find it hard to find information about the firm’s headquarters, phone numbers, and where it’s domiciled it’s probably intentional and you should not waste your time with that firm
- Read customer reviews. Take the time to read customer reviews at places like TrustPilot.com but be aware that sometimes firms try to trick the system by hiring people to give fake positive reviews, showing for example a huge number of positive reviews and titles sometimes written in comical ways. Another trick is to give monetary or other valuable incentives to real clients who leave positive reviews. Other places with interesting crypto exchange reviews are the Apple store and the Google Play store, which contain app ratings and fairly precise detail of what users like and dislike about the app and the service provider. Social media groups also give candid remarks on their experience with crypto firms, but it’s hard to tell when a social media horror story is representative of wider issues at a firm and is authentic.
- Look for signs of life. If you find that the website’s more recent announcement is from a year ago, you can safely run along. Look for a blog or broker news containing relevant and current market commentary or new products being added weekly.
- Look for their published fees. Type “trading fees and [crypto firm name]” on your favorite search engine to verify if fees are high or low. Generally, high fees are more than 1.0% of the amount invested, while low fees tend to be closer to 20 basis points or lower. There are other types of fees that you should look at and compare: deposit/withdrawal fees, custody fees, commission fees (if any).
- Learn about their history and investors. If there is little history about a firm, or a simple description of why they launched the service, be extra cautious.
RELATED ARTICLES
Source: https://www.forbes.com/sites/javierpaz/2022/03/16/the-best-global-crypto-exchanges/