After years of turbulence, including jail time for the founders of the two biggest cryptocurrency exchanges, many providers are getting serious about controls and regulation. Coinbase leads our list of the 20 most trustworthy marketplaces in an industry that still requires caution.
Forbes reporter, Nina Bambysheva and Javier Paz, Forbes' Director of Data & Analytics, discuss the top crypto names and market-places.
Read the full story on Forbes: https://www.forbes.com/sites/javierpaz/2024/05/15/the-worlds-best-crypto-exchanges-and-marketplaces/?sh=48dae9117558
0:00 Introduction
0:22 The Criteria For The Best Bitcoin Marketplaces
2:03 The Rise In Different Cryptocurriences And Digital Currency
7:07 FTX Regulations And What's To Come
16:11 What Is The Bitcoin Market Overseas?
18:46 Tips For Bitcoin Investors
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Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.
Forbes reporter, Nina Bambysheva and Javier Paz, Forbes' Director of Data & Analytics, discuss the top crypto names and market-places.
Read the full story on Forbes: https://www.forbes.com/sites/javierpaz/2024/05/15/the-worlds-best-crypto-exchanges-and-marketplaces/?sh=48dae9117558
0:00 Introduction
0:22 The Criteria For The Best Bitcoin Marketplaces
2:03 The Rise In Different Cryptocurriences And Digital Currency
7:07 FTX Regulations And What's To Come
16:11 What Is The Bitcoin Market Overseas?
18:46 Tips For Bitcoin Investors
Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1
Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:
https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript
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More From Forbes: http://forbes.com
Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.
Category
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LifestyleTranscript
00:00 (upbeat music)
00:03 - Hi everyone, I'm Nina Bambushiva,
00:05 a staff writer here at Forbes.
00:06 Joining me now is our director of data and analytics,
00:10 Javier Paz, and we're here to talk about
00:13 the latest ranking of crypto exchanges
00:15 that Javier just published.
00:17 Thank you for joining me, Javier.
00:19 - Hello, Nina, a pleasure to be here.
00:21 - So we're here to talk about the latest ranking
00:26 of the best crypto exchanges you just published.
00:29 So this is not your first list.
00:31 For those who may not be familiar with it,
00:34 or those who just need a refresher,
00:36 can you tell us a bit about the list itself?
00:39 What types of platforms you've considered,
00:42 the number of exchanges you've looked at,
00:45 and your methodology,
00:46 what were the major criteria you looked at?
00:49 - Sure, thank you.
00:52 Just to be precise then,
00:53 the last time we ran a list,
00:55 we had selected 60 entities.
00:59 And this was a composite of crypto exchanges,
01:01 as well as other financial intermediaries
01:04 offering crypto to their clients.
01:07 This year, we're only doing 20.
01:09 And there's some good reasons for that.
01:12 So in terms of what makes us different,
01:17 the Forbes list is not your typical
01:19 ranking affirmed by volume,
01:23 or some other criteria like,
01:26 let's say the number of web visits,
01:27 or the number of coins that you offer.
01:32 But it's more thoughtful.
01:34 So we start the list with some 650,
01:38 approximately, exchanges and different service providers.
01:43 And then we break it down to something more meaningful,
01:46 so more actionable.
01:47 So the first test that we applied to reduce that list
01:52 was to ask the question,
01:55 how many of these entities have verifiable assets
02:00 that we can see through a third party.
02:03 And we looked at Arkham,
02:06 as Arkham Intelligence is a platform
02:08 that provides a lot of information
02:10 about wallets and entities.
02:12 And we looked at there that,
02:15 and ascertained that approximately 100 crypto exchanges
02:20 had assets, although not all of them
02:24 in a significant number.
02:26 So we then applied then that test,
02:29 and we shaved off right off the bat,
02:32 550 exchanges that didn't make that cut.
02:36 And then we started looking at things like,
02:38 how well regulated are they?
02:44 And we started going deeper into their offerings.
02:48 What price do they charge for people
02:52 just starting out as a price taker?
02:54 And without any discounts or anything like that.
03:00 And then we went into things like the transparency.
03:05 We invited them to participate in our surveys.
03:11 We also looked at their,
03:15 so if they responded candidly to the questions,
03:19 then they received full score.
03:20 If they didn't answer in full,
03:22 then they got partial score.
03:24 Or if they didn't participate in the survey,
03:26 they didn't get any score.
03:28 So, and that's about 15% of the total.
03:32 So we went like that through different categories.
03:35 Regulation was particularly important.
03:38 It was something like 20% of total.
03:40 And we looked at also considerations
03:44 of not just what you regulated,
03:47 which is not a foolproof way of knowing
03:52 that somebody is above board,
03:55 because as we know, FTX in theory was regulated,
03:59 but it didn't follow the rules.
04:01 But there were lessons that we could learn from that.
04:04 And that's why the first test that we did
04:07 was the Bitcoin and Ethereum holdings test.
04:12 FTX had some Bitcoin,
04:15 but much of their balance sheet was made up
04:17 with their own tokens.
04:19 So in our list of 20 exchanges,
04:22 there's none that have their own tokens.
04:26 Whereas in the list of exchanges that we excluded,
04:30 the 13 exchanges that we excluded,
04:33 they represent something like 44%
04:36 of their total tokens that they hold,
04:39 are their own issued tokens.
04:42 And Bitcoin and Ethereum only represent 33%.
04:46 So I think that in itself is a big red flag
04:51 for not trusting that their tokens will be worth
04:56 as much as they say that are worth.
04:59 So we went through various criterias like that,
05:04 you know, nine in total,
05:05 that let us have a composite view of where they're at.
05:09 But the traditional benchmarks like volume,
05:14 we only consider for 10% of the total,
05:19 5% for spot and 5% for derivatives activity.
05:24 And for products, only 5% as well.
05:28 Why?
05:30 Why so low?
05:30 Because the offer of products can be a double-edged sword
05:36 in which, you know, on one hand,
05:39 it gives end users a yield on,
05:42 by staking or lending their tokens.
05:48 But on the other hand, as we saw with Gemini and others,
05:51 that got into trouble by trusting the wrong counterparties.
05:56 And as a result, they were not able
06:00 to make hold their clients up until very recently.
06:04 So for those reasons, we only think that
06:07 having the latest products, you know,
06:12 it's not necessarily super positive per se,
06:17 but it's not terrible either.
06:19 Innovation is a good thing.
06:21 But another point is that if you have a lot of products,
06:26 but you're not regulated, like in the case of Binance,
06:31 they're not ranked for several reasons.
06:35 But one of the reasons is,
06:37 they may offer a lot of tokens, a lot of products,
06:43 but if their main business line is not regulated,
06:47 in any major or significant way,
06:52 then there's less credibility that
06:58 they can provide guarantees to their end users
07:01 that everything will be fine.
07:02 So those are some of the considerations
07:05 that we took into account.
07:07 - All right, and you mentioned FTX and Binance,
07:12 as many people know FTX,
07:14 which was one of the largest crypto exchanges
07:17 before it filed for bankruptcy.
07:19 And a lot has gone on since then.
07:25 How would you say the landscape of crypto exchanges
07:29 in the US and globally changed since November 2022?
07:34 - Right, so we have seen a much more subdued marketplace
07:42 with fewer participants, but not too fewer than then.
07:47 So there's been a lot of layoffs
07:51 as a result of the changes in the market conditions.
07:56 And we've seen Kraken reduce these employees
08:01 as well as crypto.com particularly.
08:04 And so we've seen that these painful cuts
08:10 have been run by most firms.
08:12 But right now we have a resurgence
08:17 in the number of service providers.
08:19 So since September of last year,
08:22 we have seen a rapid increase in the number
08:25 of the unknowns crypto exchanges popping up
08:30 in places like Crypto Compare or CoinMarketCap
08:35 that tell to have a lot of volume,
08:39 but they're brand new
08:40 and they don't have assets to show for it.
08:42 So we think that that kind of self-promotion
08:47 that they do is deceptive.
08:49 And it's overcome by having a shorter
08:54 but more true list like the ones that we have here at Forbes.
08:58 - So tell us what are the best ones.
09:03 Can you give us a little preview
09:05 and what made those top platforms stand out?
09:08 - For sure.
09:10 So we have Coinbase, which is the largest,
09:13 but one of the things that it's important to understand
09:19 is how much larger they are.
09:22 So if you think about it,
09:24 they have over $300 billion in total assets.
09:28 Compare that to Binance's,
09:30 which is probably a hundred plus billion
09:35 as the next largest.
09:37 And in terms of Bitcoin itself,
09:39 the differences are also stark.
09:42 In the case of Coinbase, they have over 219 billion,
09:48 whereas Binance only has something like 59 billion
09:53 when we measured it.
09:56 So a huge difference.
09:58 And so Coinbase has become the gorilla in the room.
10:03 And then there's a long list of firms that,
10:10 and I think also it's important to highlight
10:12 the size of some of the larger derivatives exchange
10:16 like the CME, that is also in the number two list.
10:21 They are not a crypto exchange per se,
10:22 but they are so important to the crypto markets
10:26 because they offer what is the closest thing
10:28 to an official price for Bitcoin
10:32 because they do it in a credible way.
10:36 They find that for price discovery,
10:40 they are probably the best out there.
10:42 And the cost of trading over there is very low.
10:44 So, and they're open to both institutions
10:47 and retail individuals as well.
10:50 We also have Robinhood that has disrupted,
10:54 you know, with their zero trading policy,
10:58 zero policy for trading the stock market,
11:03 the options market.
11:05 We saw how in 2018, they forced the hand
11:08 of a giant like Schwab and others
11:11 to match their zero fee on stock trading.
11:16 So they came, initially they were ignored
11:19 as a fintech, you know, wannabe,
11:24 but eventually they were taken much more seriously.
11:29 And so right now they have tens of millions of traders
11:33 and they offer, you know, a good 15 assets to trade.
11:38 So they're very serious contenders as well.
11:40 We think that over time, they're going to force the hand
11:43 of the Coinbases of the world
11:45 and others to lower their fees here in the US.
11:48 And that will mean that they have to redo much
11:54 of the things that they do
11:56 because they will have less money to make from it.
12:01 So that's gonna present an interesting challenge
12:04 for the industry at large.
12:06 There's gonna be more consolidation
12:07 probably as a result of it.
12:09 And that's, I think is a positive change overall.
12:14 Then we have a Korean exchange upbeat,
12:17 which is the Coinbase like of South Korea,
12:22 which has a phenomenal size, if you will,
12:26 in the country with some estimated 80% market share
12:30 and a lot of Bitcoin holdings
12:33 and as well as other assets as well.
12:36 So we think they're pretty serious
12:38 and their fees are low.
12:40 Derivate is the fifth player in our list
12:43 and they have just a gigantic base
12:48 of Bitcoin options to offer
12:52 and Bitcoin and Ethereum options.
12:54 So something like 21, 22 billion
12:57 as of the latest count.
13:01 And that's a lot of contracts that are outstanding
13:06 in open interest waiting for the Bitcoin price
13:10 to move up or down.
13:11 So it's for sideways markets,
13:15 like the ones we're experiencing today,
13:17 trading options is a pretty good way
13:20 and the fees are very low.
13:22 So their move to Dubai from Panama
13:27 was a very shrewd move.
13:28 I think it made a lot of sense
13:30 for them to go in the direction of being regulated.
13:34 There's one more company that is not in the list.
13:38 However, we wanna highlight
13:40 how they're going in the right direction
13:42 and that is OKEx.
13:45 They may not have the best reputation,
13:49 but they are trying to get their licenses
13:51 to get themselves in a better position,
13:54 hopefully for next year to be considered.
13:56 But they recently gained in this year licenses
14:00 in Dubai or in the Middle East, Barra,
14:05 as well as in Singapore as a major payments firm,
14:09 as well as in Hong Kong, they are pending
14:12 and they just gained one in Australia.
14:14 So all good news and hopefully a sign
14:16 that they are gonna take compliance
14:18 much more seriously than in the past.
14:20 So anyways, those are some of the top five.
14:24 I welcome you to come and visit
14:27 for anybody out there listening
14:28 to become more familiar with the rest of the list.
14:31 Now, the Securities and Exchange Commission
14:35 infamously sued Coinbase
14:37 and is seemingly preparing to sue Robinhood.
14:40 How were you thinking about those actions
14:43 when you prepared the list?
14:45 Right, so we looked at the substance
14:49 of the charges raised against these firms
14:52 and they seem to be more on the lines
14:54 of a regulator activism than really a reflection
14:59 of a criminal wrongdoing, which in one case,
15:05 in the case of Binance, they are pursuing something
15:08 other than being pursuing civil courts.
15:13 So that's a difference that we're making in here.
15:21 So whereas the SEC may have sued Kraken, Coinbase
15:26 and Robinhood and Uniswap
15:32 for not following registration rules,
15:36 in the case of Binance, it would be something else,
15:39 much more serious of an allegation support.
15:43 So for those reasons, we made a distinction
15:45 between the current charges against this group of firms
15:51 that made the list nonetheless.
15:53 Right, it is important to consider the larger context
15:57 of the SEC stance on crypto.
16:00 Now, CME and Robinhood are not your typical crypto exchanges.
16:05 What else may readers find interesting
16:07 when they look at the list?
16:09 Well, it's a very geographically diverse list.
16:14 So we have six from the US, but four from Europe.
16:19 And then we have four from Japan, two from South Korea,
16:24 and one from each in other locations like Dubai.
16:29 And that's, I think it reflects a little bit
16:37 of the diversity of crypto offerings out there.
16:42 So in the case of the Japanese exchanges,
16:46 the fees are extremely low.
16:48 It's a very competitive market.
16:49 They have more mature regulation.
16:52 Also in Korea.
16:54 In Europe, it is less developed in terms of the participants
17:01 and the adoption that we've seen by the end users,
17:06 but the regulations are ahead of those of the US.
17:11 And in the case of the US, we have obviously a lot of demand
17:17 for crypto trading here in the US.
17:22 And most of it is captured by the ones that we,
17:26 the six firms that we identified.
17:28 But some of it is also going to firms
17:32 that are not authorized to offer their services to US firms.
17:36 And that's something that probably will change over time
17:39 as their compliance increases.
17:42 But yeah, that's a little bit
17:44 of how the makeup of the list is unique.
17:49 - Right, many people have said that Asian regulators,
17:54 crypto regulators are ahead on a lot of the things
17:59 we are still discussing here in the States.
18:01 So that is definitely interesting to see.
18:05 And you've analyzed a lot of exchanges, tons of data.
18:10 You spoke with other crypto analysts.
18:14 You reached out to those firms.
18:16 Now your average investor doesn't have the time
18:19 and resources to do all that work.
18:22 So my question is, I guess,
18:26 what would you recommend people who are considering
18:29 starting to trade crypto
18:31 or are just trying to understand this market better?
18:36 What simple advice can you give them
18:38 in terms of choosing a platform?
18:41 Are there certain things
18:42 that they should pay special attention to?
18:45 - Yeah, certainly.
18:48 So some of the tips we give investors in our piece was,
18:53 don't fall for glitzy websites
18:58 or don't fall for lists that show rankings based on volume
19:03 because those are highly corrupted
19:07 or deceptive in some way, important ways.
19:12 So the best way to do a due diligence process
19:17 is to go to a place like ARKAN and get registered there
19:22 and check the name of the exchange
19:26 that you're looking to participate in.
19:29 First of all, find out how much Ethereum
19:32 and Bitcoin they have,
19:33 because if they show very little or nothing,
19:36 then you probably are,
19:39 you should be running and going somewhere else
19:43 because if 66% of all,
19:48 Bitcoin and Ethereum represent 66%
19:52 of all cryptocurrencies out there,
19:56 and this exchange lacks something comparable,
20:00 where 66 of its holdings are Bitcoin and Ethereum,
20:05 then there's something wrong with that picture.
20:07 For those who are interested in learning more
20:09 and checking out the full list,
20:11 please check out Javier's article.
20:14 Thank you.
20:15 - You're welcome.
20:17 Thank you, Nina.
20:17 Thank you.
20:18 (silence)
20:20 (silence)
20:23 [BLANK_AUDIO]