Investment Operations

CryptoCompare Benchmark for Crypto Exchanges to include CCP and Operational Risks

Collateral Management

Digital asset data specialist CryptoCompare, has updated its cryptocurrency Exchange Benchmark, revealing a new ranking of exchanges based on several criteria including counterparty, operational, trading and security risk. The Benchmark ranks more than 165 global spot exchanges to bring transparency and accountability to the cryptoasset exchange landscape by providing a framework for assessing risk. The Benchmark assigns a AA – F grade to help identify the lowest risk venues in the industry.

According to Dave Balter, CEO at Flipside Crypto, accurate and insightful rankings are a key data set for investors in any healthy market. “We encourage any initiative that fosters transparency and helps investors navigate the digital asset markets,” he said.

The analysis reveals that US exchanges retain the top spots, with Gemini ranked first. Gemini is followed by Coinbase (2), Kraken (3), itBit (4) and Bitstamp (5).

As the digital asset industry evolves and expands, the need for reliable metrics to evaluate the growing list of cryptocurrency exchanges is paramount. “Our Exchange Benchmark aims to provide this transparency by evaluating exchanges using a clear methodology to assess risk, and our updated Benchmark builds upon our trusted methodology to better inform decision-making for market participants,” said Charles Hayter, Co-Founder and CEO of CryptoCompare.

Key findings:

  • Lower-Tier exchanges (grades C-E) have continued to lose market share to Top-Tier exchanges (grades AA-B), quarter on quarter.
    Top-Tier exchanges (grades AA-B) accounted for 32% of global volumes in Q4 2019. In 2020, they accounted for 36% in Q1 and 40% in Q2.
  • The top three decentralised exchanges (DEXs) based on our refined DEX methodology are Binance DEX, Switcheo, and IDEX.
  • 38% of exchanges were found to interact with high risk entities for more than 25% of transactions, according to CipherTrace’s Interaction Risk data.
  • 4% of exchanges have been hacked in the last year.
  • Only 15% of exchanges state that they hold more than 95% of crypto in cold wallets.

“Gemini provides retail and institutional investors with a simple, elegant, and safe way to buy, sell and store cryptocurrency,” said Tyler Winklevoss, CEO of Gemini. “From the beginning, we have created high-integrity products that revolve around compliance, regulation and security,” Winklevoss added.

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