This article will take a closer look at one of the leading cryptocurrency exchanges – Binance. We will analyze its level of security and see whether the platform is trustworthy for digital asset trading. Moreover, we will review its customer protection policy and evaluate its compliance with regulations in different regions worldwide.
Regulation and KYC requirements
In the last several years, government regulation in the cryptocurrency sector has been significantly increasing. Providing the so-called KYC (Know your customer) information is now the only way to trade large amounts of digital assets, most platforms and exchanges have already implemented such policies into their work. The largest exchange on the market by volume, Binance, has also placed limitations for accounts lacking KYC.
According to the company, KYC regulations are mandatory for major cryptocurrency exchanges due to concerns of money laundering and other illicit activities. At present, customers can still create accounts and use some basic functions without providing identification. To increase their withdrawal, deposit, and transaction limits, clients are obliged to complete their validation. There are currently three verification levels on the platform, each with its respective withdrawal and deposit limits – basic, intermediate, and advanced. All of them require customers to provide at least a valid ID.
Binance operates according to local Anti-Money Laundering and Counter-Terrorism Financing regulations (different in each country). Collecting personal information for tracking potential criminal activity is pretty much the only way such illicit actions can be detected, so having proper KYC policies is a must-have for an exchange to be perceived as reliable.
Network security and safety measures
Binance is thought to be one of the most secure exchanges in the cryptocurrency sector. The reason for this is that the platform focuses diligently on keeping user funds safe by implementing the newest technology and some of the best safety practices in the industry.
The exchange uses advanced Artificial Intelligence (AI) solutions for identification and facial recognition. Moreover, big data solutions are used to monitor each transaction or activity conducted on the platform in search of illicit and suspicious behavior. Binance further claims that its cyber forensic team traces the cause of each attempted misdeed on the exchange.
Since the start of its operation, only one breach of the platform has been reported. In May 2019, $40 million were stolen using viruses, phishing, malware, and other social engineering techniques. In response to that, Binance used various tools to increase its network security and help educate users on how to protect their information through various tutorials, articles, and guides.
Insurance and customer protection
To further prevent customers from losing their crypto to third-party breaches, a Secure Asset Fund for Users (SAFU) was introduced to the exchange in March 2018. According to Binance, 10% of all trading fees received are allocated directly to the fund, serving as a last resort in case of theft.
While Binance has many features to prevent illicit activity on the platform, two of them have proven highly efficient for its broad customer base. Binance’s state-of-the-art Risk Control System is set up to constantly check for unusual activity and irregular trades on the network. Moreover, to ensure that clients are protected from potential frauds, the exchange has made a decent investment towards providing education to clients through the ‘Binance Academy’.
When it comes to the safety of user funds, Binance holds the majority of its digital assets on cold storage to prevent them from being tampered with from the outside. Specific offline storage facilities are designed to keep most of the cryptocurrencies, thus putting them out of reach in case of a security emergency.
At last, we will take a look at one of the most essential safety measures, which might help you preserve your account from being compromised – the authentication process. Binance works with a 2FA, or two-factor authentication, which can either be SMS or Google authentication code.
For SMS verification, you must provide your phone number and validate your login with the verification code that the platform will send you. Google authentication generates an OTP (One-time password) at regular intervals, using a backup key as a seed. This password is required each time you try to log in to your account.
Evaluating the reliability of an exchange depends on a lot of factors. These include the safety of the network, the insurance policies of the platform, the malware-detection software, the authentication of user accounts, as well as the technical response to a potential network breach.
As the most widely used online cryptocurrency exchange, Binance has been integrating the newest cybersecurity technology and tools on the market while providing top-notch customer support to users. While it is never a good idea to keep all your digital assets on a remote provider, Binance might prove to be a decent choice for your investments.
Nothing on this website should be perceived as financial, investment or trading advice. We urge you to do your own research prior to investing and we highly recommend that you consult a certified financial advisor.
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