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CryptoCompare’s Latest Exchange Benchmark Reveals U.S. Venues Score Highest
Traders Magazine Online News, November 27, 2019
CryptoCompare, the global leader in digital asset data, announced a major update to its cryptocurrency Exchange Benchmark. The new product now ranks 160+ active spot exchanges globally, offering market participants and new entrants the most comprehensive, granular and reliable source of information on the best digital asset trading venues.
Launched in June 2019, CryptoCompare’s Exchange Benchmark was created in response to growing concerns over digital asset exchanges engaging in wash trading and incentivised trading schemes to inflate volumes. The rankings bring transparency to the market and serve as a guide to traders, investors, regulators and exchange service providers wishing to understand the cryptoasset exchange landscape and manage risk effectively.
The analysis reveals the top ten exchanges to be: Gemini (1), itBit (2), Coinbase (3), Kraken (4), Bitstamp (5), Liquid (6), OKEx (7), Poloniex (8), bitFlyer (9) and Bitfinex (10).
“Security has been a key Gemini pillar since inception and protecting our customers’ cryptocurrency is a priority as we build the future of money”, said Jeanine Hightower-Sellitto, Managing Director of Operations at Gemini. "Our institutional and retail investors need a secure marketplace to buy, sell, and store their cryptocurrency, and we are pleased to be recognized for providing that to the industry."
Rich Teo, Paxos Co-Founder and CEO Asia, said: "Paxos is a name you can trust. We were the first regulated Trust company for digital assets and we are committed to integrity, transparency and safety across our operations and products. The itBit by Paxos fiat-to-crypto exchange is an institutional-grade order book and allows our customers to trade with confidence.”
Miha Grcar, Head of Business Development at Bitstamp, said: "The availability of reliable data will increase transparency in the digital asset class and promote safe, efficient markets. We are delighted to be recognised in the CryptoCompare Exchange Benchmark as one of the top five exchanges in the world. This is testament to Bitstamp’s relentless focus on providing our clients and partners with world-class infrastructure and security.”
“We are delighted to be recognised as one of the leading exchanges in CryptoCompare’s Exchange Benchmark, scoring second-highest for market quality and data provision”, said Paolo Ardoino, CTO at Bitfinex. “Providing investors and traders with access to genuine liquidity ensures fair, orderly markets. Concerns over fake volumes continue to afflict the cryptocurrency industry. We embrace all initiatives that seek to bring greater transparency and confidence to digital asset markets.”
“High integrity data is the bedrock of any market and the CryptoCompare Exchange Benchmark is a valuable tool that is actively encouraging best practices among crypto trading venues. We welcome any initiative that helps provide institutional and retail investors with a secure, trusted marketplace”, said Gabor Gurbacs, Director, Digital Asset Strategy at VanEck.
“Tabb Group’s latest outreach with institutional investors found that half of buy-side institutions with AUM between $150m-$1bn, and one-third of those with AUM over $1bn expect their allocation to crypto-assets to grow next year. The entry of these institutional investors into the market will intensify the need for reliable sources of information on digital asset exchanges”, said Monica Summerville, Director, FinTech Research, Tabb Group.
“Charles Hayter, Co-Founder and CEO of CryptoCompare, said: “We are pleased to offer the industry the most comprehensive, granular and reliable source of information on the best digital asset trading venues. Our second Exchange Benchmark now includes a vastly expanded set of exchanges and even more granular analysis to enable market participants and new entrants to identify the best trading venues worldwide."
Key findings from the expanded Exchange Benchmark include:
- The top four exchanges are U.S. based
- Top-tier exchanges (grades AA-B) account for 33% of global volumes while lower-tier exchanges (grades C-E) account for 67% of global volumes
- 41% of exchanges incentivise or reward traders with airdrops, while 14% of exchanges engage in Trans Fee Mining (TFM)
- Only 8% of exchanges use a custody provider to store user assets
- Only 4% of exchanges offer third-party insurance in the event of a hack
- Exchanges that offer margin trading now represent 62% of total volume vs 52% in June
- Almost 10% of exchanges, representing $10.36bn or 2% of total volume, scored below A for their SSL rating, indicating a prominent security flaw in their browser security protocols
- Only 7% of exchanges offer superior infrastructure via a FIX connection
Updated metrics:
In addition to covering 160+ spot exchanges, up from 100+ in June, the Exchange Benchmark now offers several new categories, including:
A new Security category, which takes into account recent hacks, exchange security protocols and adherence to international standards; and a Negative Reports category which covers events such as flash crashes, customer information leaks and unusual liquidation events.
The methodology has been refined, giving more weight to key management experience; adding metrics for geography and jurisdiction; and greater detail on exchanges’ insurance provision. More than 20 currency pairs have been added and the data provision ratings category has been extended, now ranking according to the maximum order book level offered (L1, L2, L3).
CryptoCompare launched the Exchange Benchmark product in response to industry demand for reliable metrics to evaluate the vast number of cryptocurrency exchanges globally. It employs a qualitative (due diligence) and quantitative (market quality based on order book and trade data) approach and uses correlation-of-volume-to-volatility and standard-deviation-of-volume as inputs to the analysis. The Exchange Benchmark does not rely on aggregate volume data in its analysis due to concerns over volume manipulation, wash trading and trading incentives.
The ranking components include: geography; legal/regulatory; investment; team/company; data provision; trade surveillance; and market quality. Analysis is based on public information and detailed methodology is made freely available, underscoring CryptoCompare’s commitment to bringing greater transparency and improved decision-making to the cryptocurrency marketplace.
The full report can be viewed here.
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