Buying & ExchangesBeginner
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20262 min readFact-checked
How to compare crypto exchange security controls
Compare crypto exchange security controls by checking custody, account protections, audits, insurance, and breach history. Check official records first.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20262 min readFact-checked
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Key takeaways
- Compare custody first: who holds the keys.
- Check MFA, withdrawal allowlists, and recovery options.
- Proof of reserves is a snapshot, not a guarantee.
Exchanges can be hacked, fail, or freeze withdrawals.
What to gather before comparing
Compare exchanges along five lines: custody, account controls, audits, insurance, and breach history.
How to compare security controls step by step
Work through the checks in order.
- 1Check who holds the keysFind out if the exchange is custodial and controls your private keys.
- 2Look for cold storage and reservesSee if it publishes proof-of-reserves reports and claims most customer crypto sits in cold storage. After FTX collapsed in November 2022, more exchanges began publishing them.
- 3Confirm MFA and allowlistsTurn on multi-factor authentication and set a withdrawal allowlist.
- 4Check state and federal licensesIn the US, a custodian usually registers with FinCEN and holds state money transmitter licenses.
- 5Review audits, bug bounties, insuranceLook for third-party security audits, a public bug bounty program, and insurance terms; since the early 2020s, more exchanges publish these.
- 6Look up past breaches and recoverySearch for the exchange's name plus breach or frozen withdrawals and read about recovery. Mt. Gox collapsed in 2014.
After comparing: records and account safety
Keep the comparison current and protect your account.
Frequently asked questions
Proof of reserves shows on-chain holdings at one point in time. It does not guarantee withdrawals.
Usually no. FDIC covers bank deposits, and SIPC protects brokerage securities accounts.
Audits usually follow a schedule the exchange sets. Licenses can change when ownership changes.
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Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.
