CEX: The Safest Crypto Exchange Type
Due to the popularization of cryptocurrency, more and more people are thinking about buying digital assets. The safest and easiest way to do this is to make a purchase on a centralized crypto exchange, or CEX.
Centralization means that you deposit your assets to the exchange. In turn, it helps you restore access to finances if you lose the key. It is very convenient since you do not have to be solely responsible for the safety of your assets. On the other hand, the crypto exchange gets access to your funds. CEXs work similarly to conventional banks, with a whole team of specialists responsible for their security.
The most trusted cryptocurrency exchange is a service that applies a full range of security measures to ensure the safety of users’ financial assets. Clients also get way more than just the possibility to use trading tools. We will talk about some opportunities a CEX provides, as well as how to secure your account and choose a suitable website.
What does the most secure cryptocurrency exchange do to ensure your safety?
The set of measures that a CEX uses to protect clients and their assets may include:
- User verification, or KYC (Know Your Customer). A CEX receives primary data about a client, and the client gets access to the full platform functionality.
KYC is the fastest and easiest way to verify a user’s identity. This procedure is implemented by all reliable crypto trading platforms that work legally.
- Customer Due Diligence (DD). This is the second stage of verification applied to individual customers. If the user were involved in any financial fraud schemes, DD would show it.
- Constant monitoring of transactions and their nature (risk assessment) allows for identifying suspicious activity and transactions unusual for the client. If they take place, the account will be suspended. The most secure crypto exchanges usually generate a report on such activity and then send it to the regulatory authorities.
An in-depth due diligence check is possible at the beginning of relations with legal entities. This process may be conducted using some additional software.
All these measures are a part of the AML and CFT policy (Anti-Money Laundering and Combating the Financing of Terrorism). CEXs operating according to this policy always know where the money comes from, and their users do not have to worry about working with “dirty” assets.
In addition to verification checks, the safest cryptocurrency exchanges also use additional measures:
- Two-factor authentication (2FA). It helps make sure that only the owner of the account has access to it, even though someone finds out the password. 2FA represents a code that must be entered along with a password each time you log in.
- WhiteBIT, for example, also has an anti-phishing option. It helps users determine the authenticity of e-mails received from the company. If this function is enabled, e-mails about any account changes (password change, money withdrawal, etc.) will contain a code. It will signify that the e-mail has come from WhiteBIT.
- Web Application Firewall (WAF). This is a screen that analyzes all incoming traffic and protects the service from network attacks.
- In mobile applications oftrusted crypto exchanges, it may also be possible to set a single session’s duration and a PIN code (it is required to log in to the application).
The list of implemented measures varies depending on the site. The commonly required minimum is 2FA and KYC.
Why do regulated crypto exchanges require KYC?
KYC is needed to obtain a confirmation of a user’s identity. In a regular bank, this process takes place before opening an account, but even the safest crypto exchanges allow signing in without getting verified. Therefore, you will have to pass KYC before withdrawing money. Even in this case, some platforms either set a limit on withdrawing money without KYC or do not allow the withdrawal of funds until the identity is verified at all.
KYC requires photos or scans of certain passport pages, a driver’s license, or another identity document. You may also be asked to fill in the following fields: country of residence, nationality, address, and so on.
Most trusted crypto exchanges do not verify the account immediately. Once the requested data is provided, confirmation takes from one to several days. After successful verification, the user receives a notification and is allowed to use all the platform’s functions to the full extent.
Crypto to fiat exchanges
One of the main features of centralized services is that they support fiat currencies. Fiat is a currency whose value is guaranteed by the government. On a DEX, you cannot buy crypto for regular money, whereas safe crypto exchanges that support fiat make it possible to pay with USD or another currency. It also means that you can replenish your account via a bank card. For those who conduct transactions with fiat, trading on a CEX is more convenient because the withdrawal of funds to a bank card is already built-in.
How to choose the most reliable crypto exchange?
It is not easy to pick the right platform on the first try. However, if you want your first (or next) exchange to fit your needs, just reading reviews will not be enough.
If you are reading this article, you may have already decided that the next service you are going to use will be a CEX. In such a case, think about what exactly you want to get.
Are you looking for sites with up to 50-100x leverage? Not every platform can afford to provide such leverage. Read the terms of margin trading and think carefully because high leverage implies high risks.
Do you need a fiat to crypto exchange that supports certain currencies? Check which currencies are supported and make a list of the ones you need. You may also want to include the currency of your state of residence.
Do you need certain cryptos? Then choose regulated cryptocurrency exchanges based on the number of crypto pairs available there. The big ones, most likely, offer both the most popular and the new assets.
Are you interested in passive income? Study the conditions of staking and calculate what benefits you can receive. Some platforms even provide calculators that show how much profit the user will get for a specific holding period.
Keep in mind that the security and the level of support greatly influence how quickly you can resolve your issues and how safe it is to keep assets there. It is recommended not to store all assets on one exchange.
Choosing trusted cryptocurrency exchanges is not limited to these questions. Many people are interested in fees, margin call terms, security level, and so on. Therefore, you need to focus on personal preferences and the level of security of the chosen service.
If you still do not know what to opt for, read the reviews of popular services. Perhaps that will help you find what you are looking for. And do not forget – the safety of your assets depends on you as well, not just on the service. Good luck!