Top-Tier Exchanges Gain Market Share as Data Transparency and Security Standards Improve

London, 11th April 2022  - CryptoCompare, an FCA regulated benchmark administrator and global leader in digital asset data, has today announced an update to its industry-standard exchange benchmark rankings and methodology. The Exchange Benchmark assigns an AA - F grade to digital asset exchanges to identify the lowest risk trading venues in the industry. 

CryptoCompare created the Exchange Benchmark in 2019 to bring clarity to the digital asset exchange sector. As the risk assessment of exchanges continues to develop, it is important that the Exchange Benchmark reflects the increased scrutiny of financial regulators. In line with these changes, CryptoCompare has increased the stringency requirements for an exchange to be classified as Top-Tier.

79 exchanges met the threshold for Top-Tier status (rank AA-B) (vs 87 in August 2021) due to stricter benchmark standards. Of these, Coinbase, Gemini, Bitstamp, and Binance were awarded the highest grade, AA. 

Key Findings

  • Coinbase received the highest score in our latest benchmark, followed by Gemini, Bitstamp, and Binance. All of the aforementioned exchanges received an AA ranking.
  • Out of the 79 Top-Tier exchanges, 4 received an AA rating, 11 received an A rating, 27 received a BB rating, and 37 received a B rating. 69 exchanges were ranked as Lower-Tier. 
  • Top-Tier exchanges have gained market share of total exchange volumes since August 2021, increasing from 89% in July 2021 (based on Aug 2021 rankings) to an average of 91%. Top-Tier exchanges traded a total of $1.5tn in Feb 2022 compared to $62bn for Lower-Tier exchanges. 
  • Since the Exchange Benchmark was released in 2019, the industry has seen extensive consolidation, with top-tier exchanges now dominating trading volumes across the industry. Uncompetitive exchanges have had to shut down - there have been 54 exchanges closed since June 2019. 
  • KYC stringency still requires improvement on many exchanges, with 35% rated as having poor or inadequate KYC programs (vs 34% in Aug 2021). 27% of exchanges were also found to send funds to higher risk entities for more than 4% of transactions.
Charles Hayter, Co-Founder & CEO of CryptoCompare commented: “As the digital asset ecosystem continues to mature, it is important that market participants can reliably identify the lowest risk trading venues. Our Exchange Benchmark is an invaluable tool for funds, service providers, regulators, and investors who are looking to gain a better understanding of the global digital asset exchange landscape.”
Julian Sawyer, CEO of Bitstamp stated “This latest rating is a testament to our focus at Bitstamp on providing a trusted and secure exchange for investors. We’re delighted to be placed in the top three exchanges, achieving a top-tier rating in line with CryptoCompare’s strong stringency requirements. As the digital asset market becomes increasingly mainstream, benchmarks like this will be even more vital in helping investors make informed and reliable choices, which ultimately, will support market maturity.”
“Gemini is committed to providing its customers with a secure and regulatory compliant crypto platform for both individuals and institutions around the world to discover and interact with this new frontier. Since Gemini’s founding, the ethos of the company is maintaining our customers' trust by providing high-integrity offerings through our proactive effort to work alongside regulators. With CryptoCompare’s Exchange Benchmark report, it enables our company and the industry at large to showcase transparency and reliability for customers. We are thrilled to be recognized as one of the highest-graded exchanges for delivering a trusted platform.” said Noah Perlman, COO at Gemini.
"Coinbase Exchange provides global access to one of the deepest pools of liquidity of a regulated crypto spot exchange on over 165 assets. We’ve spent nearly a decade building and developing the knowledge, scalable innovation, risk management and proactive security measures to be a foundational member of the crypto economy,” said Vishal Gupta, Head of Coinbase Exchange. “As the industry leader, we believe it’s our responsibility to pave the way for industry success,” he added.
Mayur Kamat, Head Of Product at Binance commented: “Putting users first is a core part of our DNA and making sure that our platform meets the highest standards is essential to that. We have invested significantly in ensuring that Binance has industry-leading products, security, and compliance. The AA rating from CryptoCompare reflects that effort. “Choosing the right exchange is vital for having a positive crypto experience and making sure that you and your funds are safe. ‘Do Your Own Research’ is a mantra in crypto and CryptoCompare’s exchange benchmarking allows users to do just that.”

Since 2019, CryptoCompare’s benchmark methodology has expanded and is now approached in several dimensions using a comprehensive data set, covering more than 150 exchanges across 8 categories of evaluation, utilising over 60 qualitative and quantitative metrics. The latest changes to the methodology can be found here.