Cryptocurrency regulation has changed dramatically from the launch of the Bitcoin blockchain in 2009. The first cryptocurrency exchange — the now-defunct launched in 2010 BitcoinMarket.com — launched in 2010, followed by the now-infamous Mt. Gox trading platform.
The cryptocurrency trading ecosystem has evolved from a largely unregulated “wild west” in which anybody could trade cryptocurrency without providing identity information into a highly regulated financial market overseen by KYC and AML requirements for most major exchanges.
While increased oversight has made it possible for crypto exchanges to offer higher levels of security and reliability, strict regulatory requirements have established a fractured trading ecosystem in which exchange availability is divided by geographic location and jurisdiction.
There are now hundreds of cryptocurrency exchanges online — choosing the right one means carefully balancing a variety of factors such as reliability, security, history, fee structure, and supported cryptocurrencies.
If you're looking for a roundup of the best cryptocurrency exchanges globally, take a look at our guide which details the Best Crypto Exchanges in 2020. If you’re based in the United States, however, keep reading — the best cryptocurrency exchanges for US-based traders are a little different.
The United States places significant regulatory stress on crypto exchanges, which can make it difficult for US-based crypto traders to identify which trading platforms are suitable for their needs. Cryptocurrency exchanges that operate in the United States are subject to regulation by the Commodity Futures Trading Commission (CFTC), which enforces various anti-money laundering programs and requirements, FinCEN regulation, as well as other rules and regulations across various government agencies.
Cryptocurrency exchanges that operate in New York State, for example, are regarded as money transmission services — forcing exchanges that operate in the region to obtain specific licensing. Many crypto exchanges that allow users to transact in crypto assets that are defined as securities under US federal securities laws must also ensure they are compliant with various SEC requirements.
The regulation of cryptocurrency in the United States has created a market ecosystem in which US-based traders are unable to trade or register on some major crypto exchanges, or must use dedicated US-specific exchanges. Binance, for example, operates a dedicated exchange specifically for US-based users.
Determining which US regulation-compliant exchanges offer the greatest level of security, service, and competitive fees can be a complex and time-consuming process. This article will present the 5 best cryptocurrency exchanges for US-based crypto traders and investors.
There are a number of standard factors to consider when choosing the right crypto exchange, such as the level of identification documentation required to sign up, trade limits, currency support, and trading fees.
Choosing the right crypto exchange when based in the United States, however, places a few additional requirements on traders. In addition to checking for fee structures, security, and deposit or withdrawal methods, it’s essential to ensure that an exchange is legally allowed to operate within your jurisdiction.
When assessing a US-compliant crypto exchange, it’s important to assess the following factors:
Trading cryptocurrency within the United States means trading on an exchange that is compliant with US cryptocurrency regulation
Many US-accessible cryptocurrency exchanges will demand more identification documentation than their international counterparts, such as proof of address.
There are some crypto exchanges that don’t offer fiat currency support, which can minimize the amount of identity data necessary to create an account. If you’re planning on trading cryptocurrency for USD, it’s essential to ensure that the exchange you use offers USD fiat support.
Some crypto exchanges that are available in the United States place restrictions on the amount of cryptocurrency that can be purchased or traded in a single day.
If you want to trade a specific cryptocurrency, it’s best to check to ensure that an exchange supports the crypto asset you want to trade before signing up. Some US-based exchanges, such as Gemini, don’t support as many different cryptocurrencies as major international exchanges.
Cryptocurrency exchanges and traders alike are frequently targeted by hackers. It’s important to ensure that your exchange possesses a strong track record of security and offers strong security features such as two-factor authentication.
The following 5 crypto exchanges offer the best security, fees, and trading pairs for US crypto traders today:
Coinbase is the most popular and successful cryptocurrency exchange based in the United States, and offers an extremely user-friendly UI and trading experience. Founded in 2014 and based in San Francisco, Coinbase is a great choice for both new traders and professional investors.
Coinbase users can swap between a simple cryptocurrency brokerage interface with simplified trading controls, or a feature-rich Coinbase Pro interface ideal for more complex trading requirements. The Coinbase platform can be accessed via a web interface or a dedicated smartphone app, and offers robust security features.
Importantly, Coinbase has never suffered from a major cryptocurrency hack and has a strong security record. In addition to protecting user funds, Coinbase actively prevents users from sending cryptocurrency to known scam addresses, providing newer traders with an extra layer of protection. Funds held on Coinbase are FDIC insured, which means fiat currency deposited on the Coinbase platform by United States residents is insured up to a maximum of $250,000.
US residents will need to provide a valid government issued ID when verifying an account with Coinbase in addition to a selfie image.
Coinbase allows US residents to trade an unlimited amount of cryptocurrency on a daily basis, but limits withdrawals to $25,000 per day in most cases.
Coinbase doesn’t offer the most competitive fees in the market today, with taker fees between 0.05% and 0.25% and maker fees from 0% up to 0.15%. The relatively standard fees are offset by the high level of security and customer service, however.
Coinbase supports deposits in USD and a variety of other fiat currencies.
Deposits and withdrawals can be made via ACH. Credit or debit card purchases incur an additional 3.99% fee, while wire transfer withdrawals incur a $10 fee.
Coinbase supports a diverse range of 39+ cryptocurrencies including BTC, ETH, DASH, EOS, LINK, XRP, and many more. Tether, however, is not supported by Coinbase — US Coinbase users are provided with USDC as a USD-pegged stablecoin instead.
Binance is a dedicated US-only version of Binance, one of the most popular and widely-used cryptocurrency exchanges in the world. The Binance US platform was launched in order to comply with specific US regulatory requirements for cryptocurrency exchanges, and, like Coinbase, is based in San Francisco.
The Binance US platform went live in September 2019, and is responsible for roughly 15 percent of Binance’s global traffic. A major difference between Binance US and the global Binance exchange platform is the number of crypto assets available — Binance US filters crypto assets using criteria that assess the legal requirements of exchange operation in the United States and quantitative standards, which reduces the total amount of assets that can be traded on Binance US.
Despite the relatively limited selection of crypto assets available on Binance US, the Binance UI is largely unchanged, making it ideal for pro traders and crypto investors seeking more complex trading tools. It’s important to note, however, that Binance US is not currently available for US traders based in NY.
Like Coinbase, Binance US demands government-issued ID and a selfie image in order to verify an account.
Binance doesn’t enforce strict trade limits, but does impose a progressive deposit and withdrawal limit scheme for US residents. Binance US users can deposit or withdraw up to $5,000 USD, which increases to up to $30,000 and higher with subsequent deposits or withdrawals.
Binance offers spot trading fees of 0.1%, with 0.5% instant buy/sell fees. Trading fees are determined based on 30-day trading volume, with higher volume traders benefiting from lower fees.
Binance US allows deposits and withdrawals in USD.
Binance US supports deposits or withdrawals via ACH
Binacne US offers limited support for cryptocurrencies, which include BTC, ETH, XRP, BCH, LTC, BNB, and USDT.
CEX.io is a relatively new addition to the list of US-compliant cryptocurrency exchanges, recently obtaining money transmitter licensing in nine states across the US in 2019. The platform’s new licensing expanded the reach of CEX.io, which was previously limited to states in which money transmitter licensing is not required.
The CEX.io exchange is now available to US residents in 28 states. Founded in London in 2014, CEX.io originally launched as a cloud mining provider, but pivoted into a cryptocurrency exchange shortly after. CEX.io offers US traders a diverse range of cryptos that includes major crypto assets such as Bitcoin, Ethereum, and Ripple, as well as smaller cap assets such as Matic, Ontology, and Cosmos.
Like Coinbase, CEX.io offers two different trading platforms aimed at beginner traders and professional traders. Casual or intermittent investors are able to access CEX.io’s brokerage service, which simplifies cryptocurrency purchasing, while professional traders benefit from a robust, feature rich trading interface.
CEX.io separates users based on verification level. Basic verification requires government-issued ID verification, while higher tiers require address verification.
Basic verified accounts can purchase or withdraw up to $1,000 worth of cryptocurrency on a daily basis. Address verified accounts can purchase up to $10,000 worth of cryptocurrency every day, and withdraw up to $50,000,
CEX.io trading fees operate on a maker/taker model, with fees ranging between 0.16 and 0.25 percent. SEPA funding incurs a 2.99 percent fee, while withdrawal fees incur a 3 percent fee in addition to a $25 service fee depending on the withdrawal method used.
CEX.io supports USD, EUR, GBP, and RUB. US-based traders are automatically registered with USD as the default account currency.
CEX.io allows US-based traders to deposit and withdraw via ACH transfers, as well as SWIFT. EUR withdrawals or deposits can be made via SEPA transfers.
CEX.io offers a relatively wide selection of crypto assets for US-based customers, and provides strong liquidity for BTC, ETH, Ripple, DASH, LINK, and Litecoin.
Gemini is one of the few US-based exchanges that are fully compliant with NY state law, and is based in NYC. Launched by the Winklevoss brothers in 2014, Gemini is a highly regulated crypto exchange platform that works closely with regulators in order to ensure compliance — which can make the Gemini verification process somewhat complicated.
All USD deposits made to Gemini are FDIC insured, which makes Gemini an attractive option for large-scale crypto traders and institutional traders. Gemini is currently the custodian of over 1 percent of the world’s total Bitcoin volume, and is subject to New York banking law — making it the most secure option for US-based crypto traders.
Gemini enforces stringent ID verification requirements, demanding government-issued photo ID, address verification with a utility bill less than 90 days old, and a selfie image.
Gemini doesn’t impose trading limits, but does restrict the amount of cryptocurrency that can be purchased with credit or debit card to $500 per day. There are no limits on wire transfers or digital asset transactions for verified users.
Gemini operates on a maker/taker fee structure that begins at 0.25%.
Gemini supports USD, in addition to HKD, CAD, and AUD.
Gemini supports local US bank account transfers, as well as wire transfers and credit/debit card purchases.
Gemini offers an impressive range of 26 USD trading pairs, which include BTC, ETH, LTC, BCH, ZEC, LINK, OXT, and DAI.
Kraken is one of the longest-running cryptocurrency exchanges to service the United States, and offers a relatively straightforward approach to cryptocurrency trading. Unlike Coinbase, Kraken is primarily focused on experienced crypto traders and offers complex trading services such as margin trading.
The Kraken platform is accessed via web only, but a mobile app is under active development and is currently being trialled in Germany, Spain and the Netherlands. Kraken can be accessed in all US states apart from Washington State and New York.
The services provided to US traders by Kraken include all of the trading options made available to international traders, with the exception of EUR trading pairs or deposits for residents of New Hampshire or Texas.
Kraken requires government-issued ID and address verification for US-based traders.
Kraken calculates trade and withdrawal limits based on verification level — daily limits for crypto withdrawals start at $5,000 ranging up to $10 million per day depending on trade volume and verification level.
Kraken trading fees range between 0.14% and 0.26% for traders with less than $100,000 in monthly trade volume.
Kraken supports USD deposits and withdrawals for verified users, in addition to EUR, CAD, AUD, GBP, CHF and JPY.
Kraken offers a broad range of withdrawal options for US-based traders, which includes FedWire and SWIFT.
Kraken offers extensive support for various cryptocurrencies, listing major cryptos such as BTC, ETH, and XRP in addition to smaller cap crypto assets such as ADA, LINK, REP, DAI, and FIL.
The evolving cryptocurrency regulation ecosystem in the United States has created a market in which US traders are provided with benefits and security not available in other countries — such as FDIC insurance for USD deposits — with the drawback of additional identity verification requirements.
When choosing the best cryptocurrency exchange for US customers, it’s important to work with an exchange that is fully compliant with the cryptocurrency regulations in your specific state.
The IRS takes cryptocurrency tax compliance seriously, and most major US-based cryptocurrency exchanges send 1099’s to the IRS to ensure all their US-based crypto traders are meeting their tax reporting obligations. In order to meet your tax reporting requirements as a US-based crypto trader or investor, it’s important to keep a detailed log of all crypto transactions, as every trade is a possible taxable event.
CryptoTrader.Tax is the leading cryptocurrency tax software platform that streamlines the process of collecting crypto trading information for tax reporting, making it easy to quickly import entire trading histories from exchanges with simple integration.
By integrating directly with all major exchanges, CryptoTrader.Tax automatically generates your necessary tax forms from your crypto investing activity in a few simple clicks, reducing administrative friction and ensuring crypto tax reporting is performed accurately.
You can learn more about how CryptoTrader.Tax works here, or you can read more about how cryptocurrency taxes work here.