After years of turbulence, including jail time for the founders of the two biggest cryptocurrency exchanges, many providers are getting serious about controls and regulation. Coinbase leads our list of the 20 most trustworthy marketplaces in an industry that still requires caution.
By Javier Paz, Forbes Staff
With the sentencing of former industry kingpins Sam Bankman-Fried and Changpeng Zhao, the cryptocurrency exchange business is by necessity moving toward a more transparent and compliant model.
The transformation has been made easier by a doubling in the price of bitcoin over the past year–it is now trading at $61,568-powered in part by the influx of about $11.8 billion into newly allowed U.S. exchange-traded funds based on the spot price of the cryptocurrency. These ETFs, offered by sponsors including BlackRock and Fidelity, are bringing new credibility to the digital-assets industry, whose reputation had been sullied by a string of bankruptcies in 2022 that culminated in the failure of Bankman-Fried’s FTX exchange. FTX was run in a criminally haphazard way, leading to the former CEO’s conviction on seven counts of fraud, money laundering and campaign-finance violations and a 25-year prison sentence.
Zhao’s Binance ran afoul of U.S. authorities and pleaded guilty to breaking anti-money laundering laws, as well as to unlicensed money transmitting and sanctions violations. The exchange had to pay $4.3 billion of restitution and Zhao himself admitted to a single charge of failing to implement an effective anti-money laundering program at Binance, for which he was fined $50 million and sentenced to four months in prison.
Binance remains the world’s largest cryptocurrency exchange by average daily trading volume, but you will not find it among the firms we ranked. We excluded Binance and Bitmex from our 2024 ranking because of their legal and regulatory infractions. Aside from its problems with the U.S., Binance was expelled from at least 17 countries in the past three years, including India, the U.K. and Japan. One of its reputational issues has to do with not having a fixed headquarters and therefore no home regulator for the majority of its business. Other large exchanges excluded from our ranking include OKX, MEXC and Kucoin due to lack of credible regulatory oversight and what we perceived to be weak internal controls.
Most of our 20 trustworthy exchanges are based in nations with significant oversight of their financial markets; the top three are all in the United States. We considered 646 exchanges and other kinds of marketplaces that allow investors to trade crypto and narrowed down the list based on nine different criteria (See full methodology at bottom).
Leading the 2024 ranking is publicly traded Coinbase, which is not only an exchange but a top cryptocurrency custodian. It has been entrusted with 13% of the world’s bitcoin and ethereum supply and 40% of all crypto assets held on exchanges, a key indicator of trustworthiness. It gets the highest possible score for regulation, although it is not without issues with government overseers. It is currently embroiled in court actions with the Securities and Exchange Commission, which considers almost all digital currencies other than bitcoin to be securities. It therefore considers Coinbase, which makes markets in no fewer than 260 tokens, to be an unlicensed broker dealer. But Coinbase’s issues are civil, not criminal, and it also gets top marks for the quality of its audits and for its acceptance among institutional investors. Coinbase also topped our 2022 list.
The runner-up is not properly a crypto exchange at all. CME Group is the largest regulated crypto marketplace and the closest thing to the arbiter of official bitcoin and ethereum prices. With roots in the old-school Chicago commodities markets, it has more than $2 trillion in U.S. Treasury futures, trillions in other asset classes, and more than $9 billion worth of regulated crypto futures contracts outstanding, the most in the world. ETF issuers such as ProShares as well as retail traders and hedge funds use the CME for hedging and speculating on future prices of bitcoin and ethereum.
In the world of cryptocurrencies, the difference between exchanges and brokers can often appear to be a matter of semantics. For most investors, cryptocurrency exchanges are indistinguishable from securities brokers. They are the middlemen you go through to buy or sell digital assets. With this in mind we have included discount stock broker Robinhood and Fidelity on our list. Robinhood’s has zero fees on crypto transactions compared to Coinbase, which charges a $6 to $17 fee per $1,000 of bitcoin purchased (price takers). Most other crypto exchanges on our list charge transaction fees, ranging up to 0.2%. Robinhood would have scored even higher but was held back by its lack of institutional traders and derivatives. Like Coinbase, it has come under scrutiny by the SEC.
The robust regulation in the U.S. stems from existing financial law supported by a legal court system, but Washington has been unable to pass any crypto-specific legislation. That is not the case in countries like Germany and Japan. Nations that have grown tired of companies asking for forgiveness rather than permission are taking steps to ban bad actors. Since the collapse of FTX, no fewer than 10 countries have passed crypto legislation seeking to identify unlicensed exchanges and create basic disclosure requirements and consumer protections. The 2023 Markets in Crypto Assets (MiCA) directive, the first piece of crypto legislation from a major economy, is going into effect this year in the European Union, with rules to ensure fair and orderly trading and objective criteria for the efficient execution of orders. Dubai launched its Virtual Assets Regulatory Authority (VARA) in 2023, administering spot and derivatives licenses that require exchanges to share information about large market exposure.
Forbes last ranked crypto exchanges in March 2022, and at the time CoinGecko indicated there were about 6,500 tokens. Today, the crypto count surpasses 13,000. Our ranking began with 646 exchanges identified by CryptoCompare, CoinMarketCap, CoinGecko and CryptoRank. We cut the list to 20 companies from 60 in 2022 with our main focus on compliance, solvency and security.
We also wanted to emphasize that market attention is primarily on bitcoin and ether, two assets that make up a combined 66% of crypto’s $2.36 trillion market capitalization. Bitcoin and ether represent roughly 76% of the $444 billion in assets held in custody by the exchanges and dealers on our list, while the remainder came from hundreds of smaller tokens. The opposite is true for many large exchanges that did not make the cut, like the unregulated MEXC and Gate.io, based in the Seychelles and Cayman Islands, respectively. For these excluded exchanges, bitcoin and ether represent just 33% of the assets they held in custody.
In an industry that is largely unregulated and unaudited and in which hacks are common, the most important job for exchanges is to keep tokens safe for investors. Our methodology reflects this goal. Each exchange had to meet a high regulatory threshold for inclusion, earning at least seven out of 10 possible points. (Note: Each category is graded on a scale from 1-10). There are seven U.S.-domiciled firms in our 20 exchange ranking, four each from Europe and Japan, two based in South Korea and one each from Singapore, Dubai and Hong Kong. The list includes firms across the board on pricing strategies and services offered. Some, such as Coinbase and Bitpanda, have relatively high transaction fees for retail traders, while others have employed low-cost strategies.
We included derivatives exchanges that specialize in trading options and futures, that give exposure to crypto assets via regulated financial contracts to reflect the growing importance of these products for bitcoin trading. We did not include decentralized exchanges, which operate without human intervention.
Forbes Crypto Exchange Rankings 2024
SCROLL RIGHT TO SEE THE FULL TABLE
The Top 20
#1. Coinbase
Among pure crypto exchanges, Coinbase is clearly the favored custodian for traditional institutions and it has benefited from the new spot bitcoin ETFs, eight of which use it to hold their crypto. At the end of the first quarter bitcoin and ether in custody rose to $219 billion. Retail fees are relatively high, averaging nearly 1.7%. Coinbase is the largest U.S. crypto exchange by trading volume and largest globally by assets held in custody.
#2. CME GROUP
Established in 1898 and formerly known as the Chicago Mercantile Exchange, the CME Group is the largest operator of financial derivative exchanges in the world. CME launched bitcoin futures in December 2017 and as of early May it had more than $8 billion worth of bitcoin futures contracts outstanding. ETF issuers such as ProShares and retail traders use the Chicago-based exchange for hedging and speculating on the future price of bitcoin and ether.
#3. Robinhood
This discount broker, famous for gamifying investing, allows its 23 million customers the ability to trade 15 cryptocurrencies. It began offering free crypto trading in 2018 in the U.S. and expanded to Europe late last year. The firm held $15 billion of cryptocurrencies in custody as of March 31.
#4. Upbit
Think of it as South Korea’s Coinbase, except that Upbit has gained dominance in trading with its low fees (5 basis points). Upbit, which is partly owned by one of Korea’s richest investors Song Chi-hyung, is the fourth-largest custodian of bitcoin among crypto marketplaces.
#5. Deribit
The world’s largest crypto options marketplace, Deribit also offers spot and perpetual-futures trading and the bitcoin equivalent of the equity market’s CBOE Volatility Index index. In the wake of the FTX debacle, the exchange moved its headquarters and operations from Panama to Dubai, which is known for its experience regulating crypto spot markets and derivatives. Deribit had $21 billion of bitcoin and ether options contracts outstanding as of May 10. Spot bitcoin trades are free but off limits to U.S. based investors.
#6. Bitstamp
This Luxembourg-based global crypto exchange was born in 2011 and unlike crypto rivals has taken a by the book approach to getting regulatory approval in every market it enters. It holds more than $3 billion in bitcoin and ether for clients.
#7. Crypto.com (tie)
This budding exchange, owned by its founders (Kris Marszalek, Rafael Melo, and Bobby Bao), spends big on marketing. In 2021, it spent $700 million for 20-year naming rights to the arena home of the Los Angeles Lakers, Clippers, Sparks and Kings. The exchange recently reported that it had 80 million clients globally, up from 10 million in 2021. Revenue was more than $1 billion in 2022, mostly from the U.S. The firm has laid off thousands of employees in the past two years.
#7. Kraken (tie)
Second-largest U.S. crypto exchange by trading volume. In 2023, the company laid off 30% of its workforce and founder Jesse Powell became chairman as part of a C-suite revamp. The SEC sued the company in November for failing to register as a securities exchange. Kraken moved to dismiss the case in February, claiming cryptocurrencies are not securities.
#7. Fidelity (tie)
Among traditional firms, the Boston asset manager with $13 trillion of assets has long been a crypto fan. Fidelity Crypto offers clients trading in bitcoin and ether at a spread of 1% (100 basis points) per trade. It also has a growing digital asset custody division. In January Fidelity began offering its Fidelity Wise Origin Bitcoin ETF (FBTC), which now has assets under management of $9.7 billion, the third-highest among the new U.S. funds.
#10. LMAX Digital
Founded in 2018, LMAX Digital is a Gibraltar-based regulated marketplace popular with hedge funds and high-frequency traders. It is one of six constituent exchanges used to generate the CME Group’s bitcoin futures prices. It operates its own custodian firm and is seeking additional licenses in the Eurozone and Singapore. Its standard fee for trading bitcoin is zero to six basis points, but it is not available to retail investors.
#11. Gemini
Created by billionaire twins Tyler and Cameron Winklevoss, this exchange has $13.9 billion in digital assets. During the last crypto runup in 2021, its Gemini Earn program became wildly popular by paying 8% interest on deposits. The program was shuttered during the crypto collapse, leaving customers in limbo. Thanks in part to rising markets, a settlement with New York State will give Gemini Earn customers back their entire $1.1 billion of investments and up to $700 million of lost earnings. Earlier this year, Gemini agreed to pay $98 million to settle civil action brought up by the SEC and New York authorities related to its Earn program.
#12. BitFlyer
The Tokyo-based exchange custodies the most crypto assets in its home market ($4 billion) and touts 0% to 0.1% trading fees. BitFlyer is regulated in Japan, the U.S, and Europe. It was founded with backing from Japanese insurance, banking, and brokerage giants like Mitsubishi UFJ Capital, SBI Investment, and Dai-ichi Life Insurance. The company re-appointed co-founder Yuzo Kano as CEO after an ownership and management spat was resolved in March 2023, and he stated plans to take the exchange public.
#13. Bitbank
Bitbank ot bitbank.cc (not to be confused with bitbank.com) operates in the competitive Japanese market and is one of the four largest crypto exchanges. Its taker fees, charged on bids placed at market prices rather than limit transactions, are 12 basis points, which are low but higher than its large peers. Part of its success can be attributed to its offer of 38 cryptocurrencies denominated in yen, of which bitcoin yen is the largest market. The exchange is audited by Deloitte Touche Tohmatsu.
#14. GMO Japan
Part of GMO Internet group, a technology-and-finance conglomerate that runs the largest retail foreign-exchange service in the world. The exchange traded nearly $10 billion in digital assetstin April. GMO offers Japanese clients 26 cryptocurrencies in yen alongside 14 foreign currency pairs to enable investing in multiple fiat currencies and crypto at zero fees. It also provides lending and staking services.
#15. Paxos
Operates the itBit exchange, issues stablecoins, and creates crypto infrastructure that enables large clients like PayPal, Revolut and Interactive Brokers to trade crypto and offer clients custordy. Paxos is regulated by New York State and has a federal trust charter from the Office of Comptroller of Currency. The firm suffered in 2023 when New York asked it to terminate its Binance USD (BUSD) stablecoin due to inadequate supervision of Binance’s own version, which existed alongside the Paxos-minted tokens.
#16. Luno
Owned by Digital Currency Group, Luno is licensed in seven international jurisdictions (though not the United States) and offers monthly audited attestations of its holdings (attestations are less stringent than audits) . It is known for its simple wallet, or trading interface, with 26 crypto trading pairs on offer. Its transaction volume, however, is on the low side. Fees vary widely, with 10 basis points in Europe and Uganda, 21bp in Indonesia, but 60 bp in South Africa, Nigeria and Malaysia.
#17. Bithumb
Seoul-based and regulated Bithumb is the second-largest crypto exchange by volume and assets serving South Korea. It offers 288 spot coins and 297 trading pairs, mostly against the won. Bithumb is a low fee leader. It normally charges 4 basis points, but in the final months of 2023 it ran a free trading promotion. Still, Bithumb has been profitable for years. Its low cost, regulated status, and wide spot offering have generated a loyal following.
#18. HashKey Exchange
In November 2022, as crypto volatility was spiking, HashKey was securing a crypto exchange license from the Hong Kong Securities and Futures Commission, known for its rigorous standards. The digital asset exchange, which is also a full service securities brokerage, is part of the Hong Kong’s HashKey Group, a diversified financial services firm with offices in Tokyo and Singapore.
#19. Bitpanda
Vienna-based Bitpanda is regulated as a payments firm, e-money provider and virtual-asset provider in Austria and France, allowing it to offer its services to all of continental Europe. It combines crypto services with traditional brokerage of stocks, ETFs, indexes, precious metals and other commodities. It charges a stiff 1.5% in commissions or fees for entering into transactions.
#20. Coincheck
One of the top four Japanese exchanges, despite a major black eye in 2018 when thieves stole $530 million worth of NEM tokens, the fourth-biggest hack in crypto history. Dipping into its own treasury, Coincheck made its customers whole and has since rebuilt its reputation. It holds more than $3 billion in client assets today. Its current offering is limited to eight crypto assets traded against the yen, and fees are low/free depending on the pair. It plans to go public on Nasdaq via a special-purpose acquisition company transaction in 2024.
Crypto Investing: Rules To Live By
1. Don’t fall for slick websites.
The crypto exchange business has few barriers to entry. It doesn’t take much more than creating an impressive looking website, social media profile, and securing a handful of digital wallets. Assets and trading activity can be easily faked. In 2022 we published a research project showing that half of all bitcoin trading activity was likely fabricated. The risks are even higher for investors trading second and third tier tokens, which are a specialty of the lesser quality digital asset exchanges.
2. Verify, don’t trust.
Before depositing your capital at an exchange, its a good idea to investigate it with reputable data providers like Arkham and Defillama say about the assets the exchange holds in custody. If they report less than $100 million in real assets (bitcoin, ether), steer clear. Also, be very wary of any exchange-reported trading data (ie self-reported) , which is often inflated.
3. Check licenses
Crypto-specific licenses are no guarantee of safety and solvency. But more likely than not, having licenses shows that a firm is committed to transparency and complying with rules. You can also verify a license reported on an exchange’s website with the issuing authority. It is important to do so because there have been multiple false claims.
4. Don’t just accept high fees
Users paid nearly 2% in commissions or fees in 2023 to trade at Coinbase compared with near-zero fees trading crypto at Robinhood, LMAX Digital, and several Japanese exchanges. Whether its stock index fund investing or hyper-crypto trading fees eat into returns. We gave affordability has a 10% weighting in our rankings.
5. Crypto trading is more concentrated than it appears.
There may be more than 600 firms offering crypt trading, but Coinbase currently has custody of 44% of all bitcoin and ether held at exchanges. While it is a reputable company with a long audit history from Deloitte, keeping most of your assets at one service provider is never prudent. Consider spreading the wealth around.
6. Forget about fad or so called “memecoins.”
While regulators in some markets–Hong Kong, Japan and South Korea, for example–limit which tokens can be listed on their exchanges, other jurisdictions have few or no barriers. Exchanges will list nearly anything with customer demand as long as they believe that an asset is technically secure and not a security, regardless of whether a token has utility. Buying joke tokens, is not investing, it is speculating or gambling and the only thing that gives these tokens value is the existence of a fool greater than you willing to pay a higher price.
7. Don’t sweat the SEC (for now).
Given that crypto has been especially susceptible to frauds and hacks, the SEC, which is charged with investor protection, is understandably not a fan of crypto companies. In the past few years it has launched suits against Binance, Coinbase, and Kraken. Now, it has issued warnings of likely actions to Uniswap Labs (primary developer of the eponymous decentralized exchange) and Robinhood Crypto. Except for Binance, these exchanges are primarily being sued for failing to register as national securities exchanges under the Securities and Exchange Act of 1934, not for overtly deceptive practices. This is why Coinbase, Robinhood and Kraken are prominent in our rankings.
Methodology
The 2024 Forbes list began with a multi-month study of 646 crypto exchanges listed by sources including CoinMarketCap and CryptoCompare. We concluded that 74% of them lacked sufficient assets under custody to be considered for our list, using data from analytics specialists like Arkham and Defillama. Additional checks for those vetted more thoroughly included products offered on their websites, trading volume, traffic volume and regulatory history, if any. Forbes then evaluated each firm on the list in nine categories on a scale from 1 to 10. The scores were then tallied and weighted by the percentages in the second row of the ranking table above to obtain a composite final score.
BTC+ETH
Represents total holdings of bitcoin and ether. For derivatives exchanges like Deribit and CME, we are counting open interest.
10: $50+ Billion
8: $10B–$49B
6: $5–$9.9 billion
4: $1B–$4.9B
2: $0.5B–$0.9B
1: $0.1B–$0.49B
TRANSPARENCY
Forbes sent a survey to pre-selected firms. Transparency points were earned based on the number of successful responses to questions.
10: 25-28
8: 20-24
6: 15-19
4: 10-14
2: 5-9
0: 0 response
REGULATION
Points earned based on quantity and type of license, combined with reputation of home regulator.
7: Designated Contract Market
2: Virtual asset service provider
3: Payments firm
2: Money transmitter firm
3: Broker dealer
3: Crypto exchange
COST
Points were awarded based on lowest cost entry point for retail investors. Cost is measured in ‘basis points.’ Each basis point is equal to one hundredth of one percent.
10: 0-5bp
8: 6-10bp
6: 11-20bp
4: 20-30bp
2: 31-50bp
0: More than 50bp
AUDIT STRENGTH
Firms evaluated based on auditor quality and years under audit.
10: 5+ years, Big 4 (Deloitte, E&Y, PWC, KPMG)
7: 1-4yrs Big-4
3: Non big-4 audit
2: Pending first audit
0: No audit
INSTITUTIONAL CLIENTS
Top points earned for serving as a reference rate provider to the CME for pricing derivatives clients. Large institutional client base earned a half-score.
10: CME Constituent exchange
5: Has institutional clients
0: Retail only
SPOT VOLUME
Points earned based on average daily spot volume (ADV).
10: $1+Billion ADV
8: $500M-$999M ADV
6: $250M-$499M ADV
4: $100M-$249M ADV
2: $50M-$99M ADV
0: Less than $50M ADV
CRYPTO PRODUCTS
Points given based on variety of product offerings.
2: Crypto futures/options
1: Crypto perpetuals
2: Crypto stocks
2: Crypto ETFs
3: Spot crypto
1: Lending / Staking
DERIVATIVES VOLUME
Points given based on average daily derivatives volume (ADV).
10: $5+B ADV
8: $1B-$4.9B ADV
6: $500M-$999M ADV
4: $250M-$499M ADV
2: $50M-$249M ADV
0: Less than $50M ADV
MORE FROM FORBES
Read the full article here
