What to ask before you use a crypto service
Ask if a crypto service is registered with a US regulator, how you withdraw cash, and who holds your keys; registration is not bank insurance.
Vahe HakobyanEditor-in-chief
Updated Oct 5, 20263 min readFact-checked
On this page
- Registration is a filing, not insurance.
- Holds and limits decide how fast you get cash.
- The IRS treats crypto as property.
A crypto service can be an exchange, a wallet app, or a broker. US rules reach some of these companies and not others.
Is the service registered for US customers?
A US exchange that moves customer funds usually registers with FinCEN as a money services business and holds state money transmitter licenses, a requirement FinCEN has applied since 2013. Ask for the registration number and check it on the regulator's website.
How do I get my money back out?
Ask how you move crypto to another wallet and how you turn crypto into dollars in your bank. Withdrawal limits, holds, and network congestion can delay a transfer.
Who owns the crypto and my data?
On a custodial service, the company holds the private keys, and your balance is a claim on the company. If it closes, customers usually line up as creditors. A self-custody wallet gives you the keys. US custodial exchanges generally verify your identity under the Bank Secrecy Act.
What if it fails or cheats me?
Report fraud to the FTC and your state financial regulator. The IRS treats crypto as property, so you owe tax on gains when you sell, trade, or spend it. FDIC and SIPC protection do not cover a crypto balance.
Frequently asked questions
It is a state license to transmit money. Many states require one for crypto exchanges, but rules vary.
Doing so usually breaks the terms. A frozen balance may leave you with limited recourse with US regulators.
A custodial service can usually reset your login. A self-custody wallet has no such reset if your recovery phrase is lost.
No. FDIC insurance covers bank deposits, not stablecoin balances.
