As a user, security must be your number one priority when it comes to choosing the right custodian for your assets. However, choosing the right crypto exchange is not as easy as picking the first one you see, as you may fall victim to scams, low liquidity trades, and even potential insolvency. To avoid accidentally joining the next FTX, here are key factors you should consider before choosing a custodian:

Transparency

A good exchange chooses to do business with its customers built on trust and good faith. Operating along government regulations and policies is a good sign that the exchange wishes to operate in your country for the long run. Third-party audits and open ledgers are also effective ways of allowing the public to keep track of their balances and transactions.

Proof-of-reserves

Proof-of-reserves is vital as it establishes trust by showing that they have enough assets to back user deposits. It protects users from potential mismanagement or insolvency, serves as a competitive advantage in attracting users, aids in risk management for institutional investors, and helps manage crises by providing assurance during market or platform uncertainties.

Protection Fund

Lastly, an important factor that users must account for is an exchange’s willingness to go beyond in protecting user funds. Besides having a proof-of-reserves, a separate protection fund ensures that the exchange is insolvency-proof. This shows that the exchange is committed to safeguarding your investments even in the worst-case scenarios. An example of such a fund is the insurance coverage or compensation scheme some platforms implement, which might cover losses from hacks or other unforeseen events.

While all of these features are convenient for users, not all exchanges offer such privileges. Luckily, Bitget Exchange fulfills its users with all of their security needs when it comes to being a crypto custodian. As a fully transparent exchange, they publish transparency reports every month that track their progress, updates, new features, and security updates. They also provide comprehensive updates on their proof-of-reserves and protection fund, ensuring that their users are at ease while trading. 

While Bitget is a stellar choice, the decision of which exchange you can go to is up to you. It is important to practice proper research and caution when choosing a custodian for your cryptocurrency assets.