Trading Cryptocurrency

15 Factors to Consider When Choosing Crypto Exchange to Trade Assets

There are more than 300 cryptocurrency exchanges that provide services for buyers and sellers across the border, but only a few of them have the required license to operate within the United States jurisdiction.

This article explores what you should look out for when choosing a crypto exchange to use in the US.

The fact that all crypto exchanges in the United States are registered to operate in the United States makes them the safest exchanges for traders, but traders look out for different factors in choosing a product. We all have preferences.

Initially, the idea behind cryptocurrency was for traders to send and receive coins anonymously, the growing concerns over crypto hacks and illegal activities, and regulations by countries have changed that anonymity.

Cryptocurrency regulations have made it possible to track stolen crypto or transactions that may be used for illegal activities.

Because of this, the United States is one of the countries that take the regulation of crypto seriously, as such, the US is not a home for every exchange.

To operate in the U.S., you must be ready to register and abide by the Commodity Futures Trading Commission (CFTC), an agency of government that enforces various anti-money laundering programs.

Having said that, the list of factors to consider below should answer your question: What crypto exchange should I use in the United States?

Generally, when investing, there are guiding factors and standards that should guide your choice.

Table of Contents

So…

What Are The Factors to Consider When Choosing Crypto Exchange to Use?

Some of the factors include the popularity of the coin you want to invest in, antecedents of the developers behind the coin, trading fees, compliance with US law and regulations, security, history of the exchange, and supported fiat among others.

Trade Limits

‍If you plan to trade bitcoin, Ethereum, Litecoin, Ripple, Shina INU and other cryptocurrencies on a large scale, trade limits is one of the important factors you should look out for.

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For instance, Coinbase which is expected to discontinue its Coinbase pro by the end of 2022, allows its advanced traders to buy up to $50K worth of crypto per day through a connected bank account through an Automated Clearing House (ACH) bank transfer, or with a wire transfer.

A crypto exchange that limits your trade to $1,000 or something lower will definitely not be the best for a trader who intends to trade more than $1K per day.

Appeal

Are there guides to make the crypto platform easy to use? Is it specifically designed for professionals?

Regulatory Compliance

As we stated above, no crypto exchange can operate legitimately in the United States without being compliant with the established cryptocurrency regulations.

If an exchange isn’t registered in the US and wants you to cut corners to use its platform, that should be a red flag.

Availability

All global crypto exchanges are listed on coinmarketcap, unfortunately, not all of them have the prerequisite license to operate in the US.

A check shows that some of them claim to support USD fiat currency, it isn’t safe to use the list to determine the legality of such exchange in the US.

When choosing a crypto exchange, you must be sure that it has a physical presence in the United States.

It is important to keep checking the availability of a crypto exchange in the US because any exchange that violates the existing cryptocurrency laws could be sanctioned and suspended.

Security

Cryptocurrency exchanges are aware of the activities of cyber criminals and are constantly updating security features on their platforms. Platforms that make security top of their priority are usually among exchanges with high trading volumes of digital assets.

Before choosing a US crypto exchange for your trade, check if it has the following security measures in place:

  • Multi-layered verification for withdrawals.
  • Two-factor authentication.
  • Custodial wallet

Note: Most of the exchanges now keep customers’ assets offline as one of the precautions against hacking and other unforeseen events that may occur.

Fiat Currency Support

‍If trading crypto for the US currency is your preference, a fiat-supported currency should be one of the factors you should look out for. The USD-supported crypto exchange makes it simpler for traders.

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Intuitive App

All the crypto exchanges that are allowed to operate in the US have an app version of their platform. But how intuitive is the app?

Is it easy to use?

Can users access all functionalities on their smartphones and mobile devices? The crypto app should provide convincing answers to these questions. Crypto trading is mobile. Traders should be able to access their accounts right on the go.

Insurance fund

Does the exchange have an insurance fund? If you want to trade on a platform that has maximum financial security, then choosing a crypto exchange that has an insurance fund to compensate its customers under specific circumstances wouldn’t be a bad idea.

For instance, some US crypto exchanges are covered by the Federal Deposit Insurance Corporation (FDIC). This way, customers’ funds can be protected to a certain level.

Support

Customers who engage in cryptocurrency trading in the United States will definitely need the help of customer support whenever things are not working for them on a crypto exchange platform.

As such, one of the important questions to ask yourself is: Will I get support when the need arises? Customer support is very important to a business because customer retention is cheaper than customer acquisition.

Supported Crypto Trading Pairs

Cryptocurrency trading pairs are assets that can be traded for each other on a crypto exchange. For instance, BTC/LTC, BCH/BTC, are some examples of trading pairs.

For a trader who is looking for ETH/BCH trading pairs, it’s imperative to check which crypto exchange that has your preference.

For an advanced crypto trader, a knowledge of crypto trading pairs allows him to effectively exploit arbitrage opportunities for the purpose of making a profit from differences in asset prices between markets.

Hacks History

The rise in crypto exchange hacking has increased since Mt Gox suffered a devastating series of cyberattacks a few years ago.

Check the hacking history of an exchange is a factor that should guide your choice of crypto exchange to use.

Trading Fees

Another important factor to consider when choosing a crypto exchange is the trading fees, compare the trading fees with other exchanges.

Coinbase, for instance, has open and easy-to-understand charges on its exchange. When you make a transaction, you’ll be charged both a spread and a Coinbase fee. 

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The spread fee (0.5% of the customer’s crypto sales and purchases) is the difference between what the crypto costs and what you pay to buy it.

Supported Crypto Assets

If you want to diversify your crypto investment, it is important to consider an exchange that supports many crypto assets.

For instance, Gemini Crypto Exchange has a lower number of coins supported on its platform when compared with Coinbase which supports over 100 cryptocurrencies.

  • Gemini: 48
  • eToro: 20
  • Coinbase: over 100
  • Robinhood: 7
  • Bitstamp: 75
  • Binance US: over 80
  • Coinlist: 8 on coinlist pro
  • bitFlyer: 7
  • FTX US: 54
  • Bittrex Exchange: over 400
  • Blockhain.com: over 280
  • Bitfront: 6
  • Crypto.com: Over 250
  • Kraken: over 120
  • ZB.COM: over 200
  • BingX: more than 250
  • Bitget: over 100
  • Gemini: 48
  • Okcoin USA: 84
  • Bitmart: over 200

Type of Crypto Exchange

You must perfectly understand the exchange platform. Is it a crypto exchange trading platform, P2P exchange, or broker?

Crypto exchanges are platforms where you can place buy or sell orders for a crypto asset. Users interact directly with the platform e.g Coinbase and Gemini,

Peer-to-Peer (P2P) exchanges are crypto marketplaces where buyers and sellers meet to agree to any given transaction. The platform only acts as an intermediary.

Crypto brokers operate like forex brokers. They set prices for buyers to buy their preferred crypto assets on the platform.

Proof of Identity

‍Most legal US-based crypt exchanges will demand the identity of their customers (traders). For traders who are not bothered about their identity on a crypto exchange, custodial instead of non-custodial exchange should be something they should be comfortable with.

The fact that an exchange requested its customers’ ID means it’s following the KYC as stipulated under the US cryptocurrency regulations.

Recap:

While the above factors are important in choosing a crypto exchange to use in the United States and around the world, it’s imperative to conduct your own research.

What I look for in choosing a crypto exchange may be different from yours, but it’s important that you lay emphasis on the security of your hard-earned money when choosing a crypto platform.

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