The recent events surrounding the Zug-based crypto trading platform Lykke have once again raised questions about trust in crypto exchanges.
According to research, the exchange was already in a difficult financial position in 2020. Now customers fear for their holdings – and are making serious accusations.
Lykke has promised to inform them of the current value of their holdings. The deposit insurance, which guarantees the protection of funds in bank accounts up to CHF 100,000, does not apply in the case of Lykke. The reason for this is that the company is not supervised by the Swiss Financial Market Supervisory Authority (FINMA). Although Lykke applied for a licence from FINMA years ago, it never received one.
This makes it even more important to research the crypto exchange and its security precautions before investing.
On my website, I present some of the platforms that I believe are very well protected, have the necessary licences and which I have been using myself for several years.
The following list contains important tips to consider before making your decision.
Security and regulation: Protecting your funds should be a top priority. Look for robust security measures such as two-factor authentication (2FA), cold storage wallets, and encryption protocols.
User interface and experience: Especially for beginners, an intuitive and user-friendly interface can make a big difference. You should also check whether the exchange offers a mobile app for crypto trading.
Supported crypto assets: Different exchanges support different crypto assets. Make sure that the exchange you choose offers the crypto assets you want to trade or invest in. Popular exchanges typically offer a wide range of crypto assets.
Reputation and experience: Before making a decision, research the exchange's reputation and experience. Pay attention to user reviews, feedback from the community and previous security breaches.
Trading tools and features: Experienced traders often require access to a wide range of trading tools and features, such as stop-loss options and margin trading. If you have specific trading needs, make sure the exchange offers the tools required for your trading strategy.
Liquidity: Liquidity refers to how easy it is to buy or sell a crypto asset. Choose an exchange with good liquidity to ensure that your orders are promptly executed at fair prices.
Fees and costs: Crypto exchanges charge fees for various services, including deposits, withdrawals and trading activities. Compare fee structures, which are available on each exchange's website. Beware of hidden fees or excessive costs, as these can erode your profits.
Customer support: Make sure the exchange offers multiple channels for customer support, such as live chat, email, or phone. Responsive customer support can save you time and address your concerns at critical moments.
Transparency and reporting: In the world of cryptocurrencies, transparency is essential. Look for exchanges that provide regular reports on trading volumes and controls. Transparency builds trust and ensures that you can make your investment decisions based on facts.
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