December 30, 2024, 9:09 am | Read time: 8 minutes
Centralized crypto exchanges (CEX) are the most widespread way for users to access the crypto world. The information website CoinMarketCap lists well over 200 such platforms. Their ranking is based on a score that takes into account factors such as page access, liquidity, and trading volume. But which crypto exchange is the best? The answer may vary depending on the user’s focus.
However, the frequently asked question of which crypto exchange is the most suitable cannot be answered so simply. This depends on several factors, including the user’s priorities. Crypto purchases can typically be made via SEPA transfer or credit card at most exchanges. So, what factors are decisive? Is it the size of the selection or the quality of the coins and tokens? Is the goal to simply buy and hold or to actively trade? The answer varies based on the user’s specific goals. TECHBOOK lists relevant portals and their advantages and disadvantages.
Overview
Caution When Using Binance
Let’s take a look at a few interesting candidates. Binance is by far the world’s leading exchange. Its founder and CEO is the Chinese-born Canadian Changpeng Zhao, known as CZ. He is considered by many to be the most influential person in the global crypto industry.
Binance has over 150 million users in over 180 countries around the world, with a daily trading volume in the billions. Almost 400 cryptocurrencies can be traded on this digital exchange. The app boasts a well-developed infrastructure. The low trading fees and fast support in the event of any problems are particularly impressive. However, the content is exclusively in English, and due to licensing restrictions, not all functions are available in Germany.
Another negative aspect is that Binance has not received a BaFin license for the German market and, therefore, apparently does not currently meet the high standards associated with it. This represents a significant disadvantage compared to competitors with such a license. Consumer advocates, therefore, advise against Binance.
Security and Reliability: Crypto Exchanges Worth Recommending
Since the crash of the major crypto exchange FTX in November 2022, users have come to expect a high level of reliability and security when using an exchange. This is especially true when it comes to more than just buying cryptocurrencies. When purchased cryptocurrencies are to be centrally managed on the exchange, trust in the nascent crypto-financial sector is essential. So, which is the safest crypto exchange?
Anycoin
The Dutch crypto broker Anycoin Direct recently received one of the coveted BaFin licenses. This guarantees consumer protection, transparency, and security in accordance with local standards.
Coinbase
The US exchange Coinbase has held a license from the Federal Financial Supervisory Authority for much longer. Coinbase is also regarded as the exchange with the highest standards when it comes to adding new cryptocurrencies to its offering. They often take a long time to scrutinize projects before they are listed for investors. Coinbase also offers German customers a savings plan and impresses with an intuitive crypto app interface.
Bison
The German crypto exchange Bison also belongs to the select group of BaFin-licensed platforms. It is backed by the Stuttgart Stock Exchange, a traditional stock exchange. A notable disadvantage of the platform is its limited selection of cryptocurrencies. A significant advantage is the absence of trading fees. However, it should be noted that the spread between the buy and sell price can indirectly incur costs.
Overall, however, the offer is worth a closer look, if only because the deposit protection of one hundred thousand euros can also be considered a real asset in the global crypto industry in terms of security.
Bitpanda
Another candidate is Bitpanda, a crypto broker based in Austria that has also received a BaFin license. Cryptocurrencies such as Bitcoin, Ethereum, and other assets can be bought, sold, and exchanged here, but Bitpanda also offers a wallet for safekeeping as well as various options for savers who bet on crypto. These include savings plans that, for example, buy automatically at the preset time, as well as the Bitpanda Card, which works like a cash card and can be used to pay with crypto.
Safekeeping of Cryptocurrencies
Security has several aspects. Licenses are not the only thing that matters. The question of how well an exchange is secured against hackers also plays a role. Although damage caused by hacks is usually compensated by the exchanges, there is no guarantee of this in many cases. In this respect, the storage of coins and tokens also plays a role in assessing their security.
Some of the aforementioned and other centralized crypto exchanges are trying to achieve greater protection against hackers by using or partially using cold wallets. The crypto assets are stored separately from the internet to make criminal access by hackers significantly more difficult.
Gate
Gate is one of the platforms that have this security feature. This type of protection can be particularly important when not only cryptocurrencies but also NFTs are purchased via central crypto exchanges. This is because a unique asset, which NFTs always are for fundamental reasons, cannot be replaced in the same way.
Gate is also one of the exchanges with the largest selection of cryptocurrencies. Almost 2000 different cryptocurrencies can not only be bought here but also traded. If you are interested in getting into a new cryptocurrency as early as possible to take advantage of the first big price increase, there is no way around exchanges with a large selection of brand-new currencies.
In addition to a lively launch platform for new crypto projects, Gate also offers a particularly clearly structured copy trading function. Copying the buys and sells of particularly successful traders is a feature that is becoming increasingly popular. Instead of coming up with your own trading strategy and spending hours on analysis, you simply copy the crypto trades of others. This can even be fully automated. In return, you pay the so-called lead trader you copy a share of the profits.
Special Features as a Plus Point
Publicly verifiable proof of financial reserves is an important plus point for crypto exchanges. The crypto exchange Bitget advertises with 100% hedging through currency reserves and the regular publication of corresponding verification data. The exchange is also considered the number 1 in copy trading. Copying the purchases and sales of particularly successful traders is a feature that is becoming increasingly popular.
Instead of devising your own trading strategy and spending hours on analysis, you simply copy the crypto trades of others. This can even be fully automated. In return, you pay the lead trader you copy a share of the profits. When trading, you should always make sure to document all transactions in detail for the tax office.
A still very rare feature of crypto exchanges is the ability to trade crypto options. Deribit is one of the few exchanges that offers users this opportunity.
Other Ways to Buy Crypto
Increasingly, banks, payment service providers, and traditional stock brokers are beginning to offer cryptocurrencies for purchase. It is worth taking a look at the relevant portals and platforms that you are already registered with. Some providers, such as Plus 500, have already been offering cryptocurrencies on the market for some time.
Technically adept users also have the option to enter the crypto world through decentralized platforms (DEX) with FIAT-on ramps, like Uniswap, allowing deposits in euros. Depending on the region and platform, deposits can be made via Visa or Mastercard, international payment service providers such as MoonPay, or even SEPA transfer.
And finally, there is also an almost completely analog way into the realm of the blockchain: Bitcoin ATMs. They can often be found near technology stores in many larger cities. After registering with an ID, you can purchase Bitcoin and other cryptocurrencies, occasionally even with cash.
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Rules for German Customers
In addition to the fact that only spot trading on crypto exchanges is generally permitted for German customers (i.e., you are not allowed to trade futures), there is one other thing to pay particular attention to: Every trade must be documented, as a tax must be paid on every single profit in Germany. This leads to a seemingly absurd bureaucratic process, but it is required by law. Consequently, some argue that Germany is better suited for ‘holders’ rather than traders. For holders of cryptocurrencies who do not trade, the law offers a globally unique luxury: the tax exemption of any profits after a holding period of at least one year.
In Austria and Switzerland, for example, the legal situation is completely different. It is, therefore, important for everyone to clarify their personal preferences and legal framework before choosing a crypto exchange. As a precaution, you can register with multiple exchanges to determine which one best suits your needs.
None of the advice and information mentioned in the text constitutes investment advice or a recommendation to buy or sell securities (Section 85 WpHG).