When selecting a cryptocurrency exchange, security must take priority over low fees. In past cycles, exchange hacks have wiped out customer holdings. We share a checklist to evaluate exchange safety levels.

5 Security Checkpoints for Exchanges

1. Percentage of Assets in Cold Custody

How much of customer assets are kept offline? Exchanges regulated by Japan’s FSA are legally mandated to keep near 100% of customer deposits in cold storage.

2. Multi-Signature (Multi-Sig) Support

Does moving funds require multiple signatures from separate authority keys? This stops thieves from draining funds if a single key is leaked.

3. Segregation of Customer Funds (信託保全)

Are company operational funds kept separate from customer holdings? Trust accounts protect client capital if the exchange files for bankruptcy.

4. Two-Factor Authentication (2FA) Defaults

Does the exchange mandate using apps like Google Authenticator for login and withdrawal confirmations?

5. Real-Time Account Access Alerts

Does the app notify you via email when logins from new IP addresses or devices are detected?