CryptoCompare has updated its cryptocurrency Exchange Benchmark, which ranks more than 165 global spot exchanges based on several criteria including counterparty, operational, trading, and security risk.
The ranking aims to bring transparency and accountability to the cryptoasset exchange landscape by providing a framework for assessing risk. The Benchmark assigns a AA – F grade to help identify the lowest risk venues in the industry.
According to the ranking, US exchanges retain the top spots, with Gemini ranked first. Gemini is followed by Coinbase (2), Kraken (3), itBit (4), and Bitstamp (5).
Tyler Winklevoss, CEO of Gemini said: “Gemini provides retail and institutional investors with a simple, elegant, and safe way to buy, sell and store cryptocurrency. From the beginning, we have created high-integrity products that revolve around compliance, regulation and security. We are excited to be independently recognized as the top exchange for delivering a trusted experience to customers.”
Charles Hayter, Co-Founder and CEO of CryptoCompare, commented: “As the digital asset industry evolves and expands, the need for reliable metrics to evaluate the growing list of cryptocurrency exchanges is paramount. Our Exchange Benchmark aims to provide this transparency by evaluating exchanges using a clear methodology to assess risk. Our updated Benchmark builds upon our trusted methodology to better inform decision-making for market participants.”
Dave Balter, CEO at Flipside Crypto, said: “Accurate and insightful rankings are a key data set for investors in any healthy market and we are pleased to support the CryptoCompare Exchange Benchmark with the FCAS Rating System. We encourage any initiative that fosters transparency and helps investors navigate the digital asset markets.”
The Exchange Benchmark was launched in June 2019 to evaluate global cryptocurrency exchanges, employing qualitative (due diligence) and quantitative (market quality, based on order book and trade data) approach and uses correlation of volume to volatility and standard deviation of volume as inputs to the analysis. Aggregate volume data is not covered in its analysis due to concerns over volume manipulation, wash trading, and trading incentives. The ranking components include: legal/regulatory; data provision; security; team/exchange; market quality; KYC/transaction risk; asset
quality/diversity and a penalty factor for negative events.
Lower-Tier exchanges (grades C-E) have continued to lose market share to Top-Tier exchanges (grades AA-B), quarter on quarter. Top-Tier exchanges (grades AA-B) have grown their share of global volumes from 32% in Q4 2019 to 36% in Q1 2020 and 40% in Q2 2020.
The top three decentralized exchanges (DEXs) are Binance DEX, Switcheo, and IDEX, according to the ranking.
CryptoCompare found that 38% of exchanges interact with high-risk entities for more than 25% of transactions, according to CipherTrace’s Interaction Risk data, and 4% of exchanges have been hacked in the last year. In addition, only 15% of exchanges state that they hold more than 95% of crypto in cold wallets.