CryptoCompare has updated its Exchange Benchmark, based on a comprehensive methodology assessing counterparty, operational, trading, and security risks.
The Top-Tier cryptocurrency exchanges among more than 150 global spot exchanges, were assigned AA-E grades to help identify the lowest risk venues in the industry. Only six exchanges made the grade: Coinbase, Gemini, Kraken, CrossTower, Bitstamp, and itBit.
As both retail and professional traders tend to settle on lower risk exchanges, the six venues have gained a further 4% market share since February 2021, from 85% to 89%.
The number of AA-A exchanges decreased due to stricter category and transaction risk threshold requirements, with only 9 exchanges meeting the status compared to 24 in Feb 2021.
CryptoCompare recognized the lack of consistency in the know your customer (KYC) process, with 34% of exchanges rated as having poor or inadequate KYC programs.
Data quality standards are another issue that still need improvement, with 15% of exchanges having pushed some form of error-prone data or unannounced updates via their REST API or Websocket data feeds over the last year.
Charles Hayter, Co-Founder and CEO of CryptoCompare said: “As more individuals and institutions seek to gain exposure to digital assets, it is becoming increasingly important to benchmark which exchanges are the most trustworthy and reliable in the space. Our bi-annual Exchange Benchmark has become the industry standard for ranking these exchanges, using a comprehensive data set that covers more than 150 exchanges across 8 categories of evaluation to identify the lowest risk exchanges in the industry.”
Vishal Gupta, Head of Exchange at Coinbase, added: “We continue to invest in innovative products that attract new customers and deepen relationships with existing ones. Our products are built to be safe, trusted, and easy to use for both retail and institutional users.”
Blair Halliday, Head of UK at Gemini, commented: “Gemini is on a journey to create a company that is both a utility and provides a sense of community for our customers and employees. Since its inception, Gemini has proactively worked alongside regulators and authorities to ensure we are providing our customers with a secure, transparent, and regulatory compliant platform – this has helped us achieve growth across both our institutional and retail business. We are excited to, again, be recognized as one of the top exchanges for delivering a trusted experience to customers.”
Security also remains an issue for the cryptocurrency space, although not mentioned by the report. This week, nearly $100 million in crypto assets were stolen from Japanese exchange Liquid.
Many exchanges continue to be operating in a regulatory grey area, especially for offering derivatives without a proper license. Binance has decided to restrict much of the trading with Australian customers following a warning from ASIC. In the United States, BitMex paid $100 million to settle charges filed by FinCEN and the CFTC.