Regarding crypto exchanges and brokers, investors are spoiled for choice. However, the enormous choices available frequently leave investors with a difficult decision. In this analysis, we dissect the aspects that every trader should consider while conducting a comparison. In addition, we identify the finest cryptocurrency brokers worldwide in 2022, including those in the United Kingdom, Europe, the United States, Canada, and Australia. Examine the following table for the top-ranked bitcoin exchanges:
Crypto Brokers in South Africa
Quotex
Deriv
Exness
IQ Option
Hycm
Easy Markets
What Exactly Are Cryptocurrencies?
Transactions involving cryptocurrencies are recorded on a distributed ledger known as a blockchain. In recent years, their popularity has skyrocketed due to the decentralized nature of the underlying technology. The network of users, as opposed to a central authority such as a bank or government, verifies all records. Because they are owned and run by individuals instead of corporations, they are seen as more democratic than traditional financial services.
Bitcoin (BTC) was the first cryptocurrency to experience a price increase. In 2017, its value rose from less than $1,000 to approximately $20,000 for the first time. The trend resumed in 2020, when BTC surpassed $60,000. This volatility has attracted the interest of investors seeking to profit from the extreme price fluctuations. Some of the best crypto platforms in London, Melbourne, and other places offer Ethereum, Cardano, Polkadot, and Litecoin, which are also popular tokens.
Comparing Cryptocurrency Brokers
When choosing the finest bitcoin broker or online exchange, there are numerous aspects to consider. There are a few minor distinctions between the two, but traditional exchanges are increasingly providing brokerage services, including leverage and futures. Below is a list of the most important things to watch out for.
Tokens
The main crypto coin exchanges provide a vast array of tokens. Traders should seek out brokers that support the cryptocurrencies with the highest market capitalization, such as Bitcoin, Ethereum, Cardano, and Dogecoin. Depending on your plan, emerging altcoins may potentially be of interest. At the moment, these may be undervalued, but they may have more potential for profit than popular coins.
Swap-only services, such as SushiSwap and Uniswap, are typically the largest cryptocurrency exchanges. These are fully decentralized exchanges where platform users can suggest listings, so that fresh coins will always be available for trading. However, while the large asset list is advantageous for portfolio diversification, investors should also be aware of the disadvantages. There are examples of “copy coins” that imitate existing high-value tokens. In addition, deposit methods are limited to crypto currency only. There is no fiat currency transacted on these services.
In addition to CFDs, futures, and binary options, derivatives such as CFDs and futures are also popular crypto assets. In some jurisdictions, some of the most popular brokers, like Binance and Kraken, now offer these. Many typical stock brokers now also offer cryptocurrency products. Interactive Brokers offers futures and options on cryptocurrencies. In addition, token trading products will be introduced in 2021.
Platforms for Blockchain
To exchange tokens, the five largest crypto brokers utilize their own unique systems. They are often quite user-friendly, making them ideal for beginners. Specifically, Binance, eToro, and Kraken all allow trades to be executed with only a few clicks.
For crypto CFDs, MetaTrader 4 (MT4), MetaTrader 5 (MT5), and TradingView (all commonly used for forex) are also popular choices for crypto CFDs. Notably, brokers who provide cryptocurrencies through these platforms often sell derivatives rather than the real asset. Even though many traders like derivatives, you need to know what you are buying before you buy it.
Many of the leading cryptocurrency exchanges have mobile apps, enabling on-the-go execution.
Regulation
Globally, crypto broker regulations vary. Because cryptocurrencies are so new in the financial services industry, many of the world’s top authorities haven’t decided how to protect them.
In the majority of legal systems, the rules are murky. In the United States, the Securities and Exchange Commission (SEC) considers them to be securities, whilst the Commodity Futures Trading Commission (CFTC) considers them to be commodities. Even more perplexing, several of the most prominent crypto brokers do not allow US citizens to trade. Binance has its own site for US customers called Binance.US, which has limited tokens and functions. In 2015, US citizens were banned from BitMex.
The FCA in the United Kingdom has been more open. Trading cryptocurrencies is legal, and many of the leading brokers are licensed. Due to the volatility of the underlying asset, individual investors cannot trade crypto derivatives.
In Australia, the ASIC’s regulations are less stringent. There are no restrictions on derivatives, but the maximum leverage is 1:5. Similar to FX and stock brokers, crypto brokers must follow anti-money laundering guidelines.
The rules vary in the remainder of the world. In Dubai (UAE), crypto brokering is illegal. At the time this was written, most other countries, such as Singapore, Nigeria, Kenya, South Africa, and India, did not have any limits.
Margin
Certain large cryptocurrency brokers now provide leverage as part of their services. In accordance with the vast majority of international standards, this ratio is typically capped at 1:1. Nonetheless, this can differ according to the jurisdiction.
Leverage, also known as margin trading, enables traders to borrow cryptocurrency from brokers to increase their position size. Investors can increase the amount of money they make from their trades by taking out positions for 2 or 3 times what their initial investment would allow.
Cryptocurrency markets are volatile, hence leveraged investments are risky. Losses are doubled as well as gains, so traders must choose if they can afford to take the risk.
Fees
High charges can quickly eat into profit margins, making fees a crucial consideration when choosing a cryptocurrency broker. The commission is often either a flat fee per trade or a percentage of volumes exchanged over a 30-day period. Both have a tiered pricing system, with trades getting less expensive with increased volume.
If your exchange does not provide its own liquidity, maker taker fees will be assessed. If you are adding liquidity to your books, the exchange will provide a rebate to encourage you to do so. If you take money out of the market, it will cost you, just like any other purchase.
Other costs include gas charges, account inactivity fees, and deposit and withdrawal fees.
Methods of Payment
Most of the time, top cryptocurrency exchanges that offer multiple ways to pay will offer at least one of the following:
- Transfer via wire
- Credit/debit card
- Crypto deposits
- Skrill/Neteller
- PayPal
Note that crypto swap platforms, such as SushiSwap and Uniswap, accept only cryptocurrency deposits. Prior to transferring tokens between platforms, you must acquire them from a broker.
Security
All trustworthy cryptocurrency exchanges will prioritize security. In the past, there have been high-profile exchange hacks that have resulted in enormous losses for consumers. Mt. Gox, an exchange that was responsible for more than 70% of all Bitcoin transactions at its peak, shut down and went out of business in 2014.The company reported that more than 850,000 bitcoins, worth more than $460,000, had been stolen. Bitcoins were stolen from the exchange for years by hackers.
And these occurrences are not rare. Blockchain technology is still in its infancy, and many exchanges are very modest compared to digital titans such as Facebook and Google. Security does not receive the same level of investment. The tide, however, has begun to change in recent years. Gemini is now protected against hacking by Aon, one of the major insurers in Europe. And many reputable exchanges are now regulated by national agencies that make sure customers are safe in certain ways.
The most secure cryptocurrency exchanges will offer two-factor authentication, hold customer money in cold storage, and make substantial security investments. Even so, it is best to store your tokens and your seed code in an external wallet that is not online.
Additional Features
Traders may additionally seek out the following additional services, depending on their specific needs:
Institutional investors use prime brokers like Coinbase, BitGo, and Genesis Capital to buy and sell cryptocurrencies.
Numerous cryptocurrency platforms now offer hosted wallets, so hardware or non-custodial wallets are no longer necessary.
Bot services: It is possible to acquire crypto robots that may be integrated into platforms online. Even if it is feasible to earn money with bots, this service is plagued by scammers. Traders should be skeptical of any investment that claims to generate passive income. Ensure that all bots are extensively back-tested before investing real money.
OTC crypto brokers: Over The Counter (OTC) services may be favored by clients seeking to execute large trades with a single counterparty. There needs to be no slippage and no size restrictions on trades.
Review of Crypto Exchanges
Use this table, including reviews of crypto platform reviews, to compare all the brokers we’ve analyzed. Note that not all of these digital currency brokers accept new accounts from your jurisdiction. If we can tell that a broker wouldn’t take your location, it will be shown in grey.
FAQs
How Do Crypto Brokers Work?
The vast majority of online crypto brokers offer the ability to purchase tokens using fiat cash via pairs such as USD/BTC. The price of a token is determined by its supply and demand with the assistance of arbitrageurs who assure its stability between exchanges.
How Trustworthy Are Crypto Brokers?
Several new crypto platforms have emerged on the market as the value of cryptocurrency has increased. In terms of service and safety, however, not all are created equal. There are trustworthy crypto brokers that prioritize customer care, but traders must conduct their own research prior to investing. Consult our list of prominent exchanges to get started.
Are Cryptocurrency Trading Platforms Regulated?
Yes, the majority of the world’s leading crypto exchanges are regulated. Look for exchanges that have FCA, ASIC, CySEC, or FINCEN registration. These are some of the most strict government agencies that look out for retail customers.
Who are the lowest-fee cryptocurrency brokers?
Binance and Kraken have some of the most affordable fees on the market. Nevertheless, it is essential to consider your investment approach. Those who intend to own tokens for the long run may prefer a different cost structure than day traders.
Does it provide cryptocurrency brokers with leverage?
Yes, there are crypto brokers who provide options for leveraged trading. However, certain exchanges allow 1:5 leverage on certain assets. Typically, rates are capped at approximately two times your initial deposit. Consult the table below for a list of the best exchangers.