A Guide to Trade Crypto Safely in the US
News | January 30, 2023, 2:00 PM | The content is supplied by a Guest author
The cryptocurrency market is quickly growing in popularity worldwide, especially in the US. It has been reported that over 13% of American residents now own crypto, and 61% of these investors did for the first time over the last six months. So if you are considering entering the crypto market, there’s no better time.
For those wondering how they can buy cryptocurrencies safely, there are lots of ways. Digital security should always be a main priority with crypto, as with other aspects like social media or traditional banking. The exchange that you’re thinking of using should utilize cybersecurity in its everyday practices. Storing your assets safely and securely is essential to limit any exposure to hackers and scammers.
There are also different laws that you need to consider. Many crypto exchanges are based outside the US, meaning they are not subject to the regulations set.
Selecting a US Exchange
Until recently, there haven't been many US-based cryptocurrency exchanges to choose from. One of the reasons we have seen such a growth in investing popularity is due to the Financial Crimes Enforcement Network’s need to make exchanges register as a Money Service Business to verify the identity of every user. It has been refused by many to accept cash deposits from US residents disabling their ability to trade cryptocurrency.
In a bid to earn a greater amount, the dismissal of American citizens has reduced the number of potential customers overall, which is why we are seeing exchanges open to depositing US cash. As a result, there are lots of new crypto exchanges that have appeared, all being US-friendly.
If the crypto exchange you use is a victim of hacking, it may become difficult for you to withdraw. In very extreme cases, these withdrawal limitations could result in a loss of money, with the exchange being unable to repay you for any lost funds.
These catastrophic outcomes are prevented by various standard practices used by most exchanges today. To prevent internal theft, they strictly limit employee access to these wallets, which are not connected to the internet. In their case, 98 percent of its crypto is kept in "cold wallets," devices that are not connected to the internet. The security of these cold wallets is often comparable to that of a bank vault.
Even a 1 percent loss on a major exchange can affect millions of dollars - that is why exchanges have a contingency fund. There's a good chance that the risk may not be worth whatever benefits an exchange provides if they don't follow these industry-standard crypto practices. This guide only discusses exchanges following these standard security practices.
Availability in Varying States or Territories
The availability of some U.S.-based exchanges vary from state to state. There are virtually no currencies in certain parts of the country. These include
- New York
- Puerto Rico
You should only use crypto exchanges that are legal in your state, no matter what state you live in. In this case, you may encounter problems during identity verification. In the event the old address is discovered in the future, you may have withdrawal holds placed on your account.
When it comes to fees, crypto exchanges usually fall under two categories:
- Beginner exchanges with higher fees
- Advanced exchanges with lower fees
If you’re looking to take a more buy-and-hold strategy towards your trading, making only a few transactions per week, trading fees may not be totally crucial to you making beginner exchanges.
For those who want to start day trading, making numerous transactions every day, a more advanced exchange is going to be a better option being exposed to lower fees.
Your identity is required to be verified in all US exchanges, but there is some difference depending on the one you choose. Some exchange apps use automated verification systems while others use humans. In most cases, automated processes are much more hard work compared to human variants. Computers have a tendency to reject applicants if they use blurry photos more often than compared to human-based services.
If you’re dealing with any trouble regarding the verification process, exchanges are generally helpful in resolving the problem. You may need to speak to an advisor or customer service over the phone or through a chain of emails, so if you’re in a rush this could be a problem. Regardless of the exchange you choose, most people can pass verification within a few days of beginning the signing-up process.