Factors to Consider When Choosing a Cryptocurrency Exchange

Factors to Consider When Choosing a Cryptocurrency Exchange (1)

When deciding on a cryptocurrency exchange, several elements should be considered. Aspects such as liquidity, user-friendliness, and the exchange’s operational region are often paramount for many investors. These considerations could provide immediate time and cost savings. Although each crypto investor may have unique preferences when selecting a crypto exchange, most individuals in this field might evaluate the following factors, in this sequence, to establish an account and commence trading.

Fees and Liquidity

Each exchange levies its own charges for transactions and services such as trading pairs or margin trading. It’s quite possible that the exchange with the lowest fees might not offer the best overall value due to potential liquidity issues in some of the listed coins. However, high liquidity can lead to smoother trades at more reasonable prices compared to exchanges that may have lower fee structures but lack sufficient liquidity.

On the other hand, inadequate liquidity can result in significant slippage, which could mean users potentially paying a steep price for an asset if they cannot execute buy and sell actions at the desired market rate. Hence, traders aiming to take advantage of the most favorable prices and ensure their trades align closely with their planned entry and exit points should thoroughly examine an exchange’s liquidity levels as part of their decision-making process.

Be Cautious About Transaction and Gas Fees

The majority of crypto exchanges incorporate a certain fee for transactions. The transaction amount can determine these charges, linked to your trading activity, or completely independent of these elements. It is vital to research the exchange’s fee structure and comprehend how it could affect your investment strategy. If you envision being a frequent trader with daily transactions, an exchange that charges lower fees per transaction might be more beneficial.

Acknowledge the “gas” fees connected to various transaction styles, and remember that some exchanges may only provide a limited array of digital currencies. If your strategy involves converting USDT to USD, ensure that your chosen exchange supports this currency pair.

Options for Customer Assistance

Various crypto exchanges extend different modes of customer assistance to their users. Some employ real-time chat facilities, enabling customers to obtain answers to their queries promptly. On the other hand, some exchanges rely on more conventional methods like email communication or telephonic conversations.

Regardless of the preferred means of communication, verify that the chosen exchange provides dependable customer assistance. This guarantees that any unforeseen issues can be handled efficiently and promptly by the user.

Asset Choices

While most cryptocurrency exchanges indeed support Bitcoin and Ethereum, any seasoned investor understands that this is merely scratching the surface. The range of cryptocurrencies supported varies greatly among different platforms. For instance, Binance offers trading options for an extensive list of altcoins, while Coinbase restricts its offerings to just four major cryptocurrencies.

“Stablecoins” present another option for diversifying your crypto portfolio. Traders often utilize these as a buffer against the notorious volatility of the cryptocurrency markets. Take TrueUSD, a cryptocurrency backed by the US Dollar, ensuring stability across digital exchanges.

It operates by collateralizing across a network of banks using custodial accounts. This structure protects token-holders legally and facilitates direct banking, with the company never directly accessing the funds. These custodial accounts allow for routine auditing and comprehensive legal protection.

In light of the recent SEC subpoena of Tether, the primary USD stable coin, the need for a reliable alternative like TrueUSD has become more pressing than ever. No matter your risk tolerance, selecting an exchange or multiple exchanges that accommodate all the cryptocurrency tokens you’re interested in purchasing is crucial. Various metrics, including 24-hour volume and market cap, can significantly impact these exchange rates, so they should be closely watched.

Exercise Caution When Selecting a Cryptocurrency Exchange

When selecting a cryptocurrency exchange, tread carefully due to the high prevalence of fraud and scams in the digital currency sphere. Prior instances of hacking or compromising of numerous crypto exchanges underline the necessity of confirming the legitimacy of the platform you opt for. It is advisable to choose an exchange that operates under government oversight.

A tangible way to verify an exchange’s authenticity is by locating its physical address. If this information is not readily available, it might be best to steer clear of that particular exchange.  Transparency is often an indicator of credibility; comprehending your investments’ legal consequences or tackling potential complications becomes challenging without knowing the exchange’s whereabouts.

User Interface and User Experience

For any average investor in cryptocurrency, the user interface and its functionalities hold significant importance. Whether you’re an experienced crypto trader or making your first bitcoin purchase, a well-designed interface that provides a good user experience can make your actions on the exchange more knowledgeable and efficient. User experience is subjective – what one person enjoys, another may not.

Nonetheless, exchanges offering the “best” user experiences will likely witness the highest increase in transaction volume in the upcoming years. Since the value of an exchange is primarily linked to its user count, it can enhance its user base and transactions through its user experience.


The nature of trading platforms can differ significantly based on the number of active users and the volume of each asset being traded at any given moment. This factor is crucial as it influences the ease with which users can initiate or close positions.

For instance, a trader wishing to offload 100 BTC may struggle on a low-volume exchange, as there may not be enough buyers at the current market price. This situation would force the trader to accept lower offers on the exchange. Low volume can create complications when dealing with altcoin positions on specific exchanges, making it challenging to transact large quantities of these assets.

Assessing volume can sometimes be a complicated endeavor due to instances of exchanges reporting inflated volumes. One approach to this issue is to examine the order book across various exchanges, observing the volumes of each asset listed and the distance between price levels.


Various exchanges adhere to distinct laws and regulations, which are determined by their locales, operations, and services they offer. Some exchanges enforce Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, requiring participants to provide personal data when setting up an account.

These procedures and prerequisites differ across exchanges. Certain platforms necessitate KYC and AML for withdrawing funds or removing specific restrictions, compelling customers to submit copies of photo IDs and occasionally proof of residence. Conversely, some platforms demand this type of customer verification during the account creation stage.


Understanding crypto exchanges can be complex, and picking the suitable one for your objectives involves some careful consideration. It’s helpful to identify the specific type of cryptocurrency you intend to deal with (since not every exchange offers all types), and to arrange a crypto wallet. When selecting a crypto exchange, scrutinize the fee system, the total security measures, whether the exchange is available in your region, and the simplicity of its use.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.