Cryptocurrency data provider, CryptoCompare upgraded its methodology and released the latest cryptocurrency exchange rankings with insightful results.
Accordingly, the cryptocurrency data provider makes use of an innovative ranking methodology that uses qualitative (due diligence). And quantitative (market data) metrics, without considering the volume factor directly in their ranking.
Besides, CryptoCompare assigns a grade (AA, A, B, C, D or E) to each exchange. Thus, helping market participants identify the highest quality, lowest risk and most reliable exchanges in the industry.
Gemini’s managing director of operations, Jeanine Hightower-Sellitto commented, “Security remains a key Gemini pillar since inception. Also, protecting our customers’ cryptocurrency stands as a priority as we build the future of money. Our institutional and retail investors need a secure marketplace to buy, sell, and store their cryptocurrency. Hence, we’re pleased to be recognized for providing that to the industry.
Binance drops out of the top ten
Notably, the cryptocurrency data provider ranks Binance 12th.
Co-founder and CEO of CryptoCompare, Charles Hayter gave further information concerning Binance.
He said the new benchmark includes a category for recent hacks that penalizes cryptocurrency exchanges. Hayter referred to the hack Binance suffered in May, when 7,000 bitcoin (worth $41.2 million) got stolen. Although, Binance users didn’t feel the effect as the exchange covered the cost using SAFU (an emergency insurance fund, to cover the lost funds).
Other factors considered
CryptoCompare reportedly considered over 160 active spot exchanges globally. Besides, the exchange added a new “Security” and “Negative Reports” categories. This aspect covers events like flash crashes, customer information leaks, and unusual liquidation events.
Besides, the latest rankings found out that only 8% of exchanges use a custody provider to store user assets. Also, only 4% of exchanges offer third-party insurance in the case of a hack. Furthermore, Hayter revealed that Bitstamp, itBit, Coinone, and Gemini fall among a few exchanges that provide a custody provider. Accordingly, Gemini and Independent Reserve offer third-party insurance, among a few.
Importantly, top-tier exchanges (grades AA-B) contribute about 33% of global volumes. Then, lower-tier exchanges (grades C-E) contribute about 67% of global volumes.
Interestingly, CryptoCompare doesn’t charge exchanges a fee to be included in the rankings.
Furthermore, Hayter mentioned that exchanges, custody providers, funds and regulators interested in getting deeper insight can purchase the underlying data and custom research. He also said that the refined methodology and rankings require thousands of research hours. Since the underlying data set considers over 300 qualitative and quantitative metrics on 160+ exchanges.
To remind, Nasdaq partnered with CryptoCompare. Both planned to issue a cryptocurrency pricing product for institutional investors.