Key Takeaways
- Coinbase is one of the biggest crypto exchanges to date, with over $439 billion in quarterly trading volume and $404 billion in assets on the platform as of writing;
- While the centralized exchange (CEX) has been embroiled in two major security-related incidents in the past, it continuously takes steps forward to improve its security;
- Notable features include 2FA, multiple signature cold wallets, advanced encryption, insurance policies, and adherence to KYC and AML laws.
Ace quick missions & earn crypto rewards while gaining real-world Web3 skills. Participate Now ! 🔥
Coinbase is one of the most popular crypto trading platforms, widely recognized for its user-friendly interface, low trading fees, and diverse contract offerings that cater to various trading styles. However, potential users often ask, “Is Coinbase safe?”.
After all, many crypto hacks and thefts have occurred globally. With this in mind, the concerns around security are paramount, and you're asking the right questions if you're currently researching options and wondering whether Coinbase is legit.
Spoiler alert: the answer is yes, Coinbase is safe for beginners and experts alike, but stick around to find out the reasons why. You can take my breakdown of the exchange’s security measures as a jumping-off point in your evaluation, especially when you are comparing it to other big names like Kraken or Binance.
Did you know?
Subscribe - We publish new crypto explainer videos every week!
DEX vs CEX: Which is Best for YOU? (Explained with Animation)
Table of Contents
- 1. Coinbase: A Concise Overview
- 2. Is Coinbase Safe? Its Security Measures Explained
- 2.1. Cold and Hot Storage
- 2.2. Insurance Policies
- 2.3. Account Verification Layers
- 2.4. Data Encryption
- 2.5. Regular Security Audits
- 2.6. User Education and Anti-Phishing Measures
- 3. Coinbase’s Regulatory Measures and Compliance
- 4. Coinbase’s User Experience and Feedback
- 5. Does Coinbase Require KYC?
- 6. Coinbase Wallet: Is It Safe?
- 7. How to Protect Your Coinbase Account
- 7.1. How to Complete KYC Verification on Coinbase
- 7.2. How to Activate 2FA on Coinbase
- 8. Other Tips to Secure Your Coinbase Account
- 9. Conclusions
Coinbase: A Concise Overview
Before diving into is Coinbase safe, it would be beneficial to understand its impact on the broader ecosystem.
Latest Deal Active Right Now:For a limited time only, get Top-rated Ledger bundles for yourself and your loved ones with a 10% Ledger discount code. Take advantage of this valuable Ledger deal NOW!
Founded in 2012 by Brian Armstrong, Coinbase has grown to become one of the largest and most trusted cryptocurrency exchanges globally. It has earned a reputation for its user-friendly interface, strong security measures, and strict adherence to financial regulations, which together ensure that users' funds and personal information are kept safe.
The platform powers the crypto economy by serving as a bridge for individuals to access the world of digital assets. It makes it easier for both beginners and experienced traders to buy, sell, and trade various cryptocurrencies like Bitcoin, Ethereum, and many altcoins. Users can also utilize fiat currencies via payment methods such as bank transfers or credit cards, among others.
With over $439 billion in quarterly trading volume and $404 billion in assets on the platform, Coinbase is a key player in the global cryptocurrency market.
It operates in over 100 countries, which speaks to its worldwide reach and influence.
Its success is due in part to its focus on delivering an intuitive and secure experience for users. In addition to the main exchange, it also offers Advanced Trade, a platform for experienced traders. The latter provides advanced charting tools, order types, and lower fees, making it a preferred choice for professionals looking to maximize trading efficiency.
📚 Read More: Coinbase Fees
The CEX also offers features like a secure wallet, staking options, and educational resources, helping users learn more about the world of cryptocurrencies.
Despite its many benefits, it experienced two major security-related incidents in the past:
1
The first one took place in 2021, when hackers took advantage of weaknesses in Coinbase's SMS-based 2FA system, resulting in unauthorized access and theft of funds from more than 6,000 accounts.
2
Then, in July 2024, a third-party data breach exposed the personal information of many users, including their bank account numbers.
In response to these incidents, the exchange took immediate action to enhance account security. They updated their SMS account recovery protocols to prevent further unauthorized access and also notified affected customers of the data breach situation.
Regardless, Coinbase is still the preferred platform for many traders due to its user-friendliness and commitment to compliance and safety. With its global reach, constantly improved security measures and comprehensive services, it proves to be a legitimate platform for trading.
Is Coinbase Safe? Its Security Measures Explained
Let’s find out what makes it a trustworthy platform and how the exchange shows commitment to user safety.
Cold and Hot Storage
Is Coinbase legit? For starters, it employs a robust security strategy to protect user funds. Here's what it claims:
For added security, 98% of crypto holdings are stored offline in cold wallets.
This approach minimizes exposure to online threats, as it involves keeping private keys offline, making user holdings less susceptible to cyberattacks.
The remaining 2% are held in online hot wallets, which are necessary for facilitating transactions.
To mitigate risks associated with these hot wallets, Coinbase maintains a substantial commercial crime insurance policy. Notably, the coverage amount is among the largest in the digital asset exchange industry.
Insurance Policies
To determine if Coinbase is trustworthy, it's important to examine the insurance measures it has in place to protect user funds in the event of unforeseen circumstances:
- Crime Insurance: Coinbase holds a crime insurance policy with a $255 million limit, which covers losses from theft, including cybersecurity breaches.
- FDIC Insurance: For US customers, the platform provides FDIC insurance for dollar balances in custodial accounts, covering up to $250,000 per user in the event of a bank failure. It applies as long as the exchange maintains accurate records and the relevant federal regulators confirm the bank’s receivership.
That said, it’s important to understand that these policies have limitations.
The former does not cover losses caused by unauthorized access to personal accounts due to compromised credentials, and the latter only applies to US dollar balances during a bank failure.
Account Verification Layers
Coinbase enforces 2FA for account access, requiring users to provide a secondary verification method,[1] such as a code from an authenticator app or SMS.
For added safety, the CEX supports hardware security keys, such as YubiKey, which provide physical, tamper-proof verification when logging in. They are resistant to phishing attacks, requiring physical possession to authenticate.
Additionally, Coinbase supports biometric verification on mobile devices, like fingerprint and facial recognition, which adds a convenient but highly secure method of logging in.
Data Encryption
Coinbase takes significant steps to protect user data, ensuring that sensitive information, such as bank account details, passwords, and personal identifiers, is stored securely.
One of the key ways to ensure this security is through AES-256 encryption, which is a bank-level protection standard to securely store sensitive credentials like your account numbers and routing information. This method makes it virtually impossible for unauthorized parties to access or decipher the data, even if they gain access to Coinbase’s servers.
Additionally, secure communication protocols are in place to protect critical information during transmission. All interactions between your device and the exchange are encrypted, ensuring that third parties cannot intercept or eavesdrop on your connection. Such a system guarantees that your data remains private while it is being sent back and forth across networks.
Coinbase has also implemented restricted access policies. Only authorized personnel, who undergo thorough background checks, can access customer data, significantly reducing the risk of internal breaches. This access is tightly controlled, ensuring that even employees have limited visibility into sensitive customer information.
When it comes to linking a bank account, how safe is Coinbase? The platform partners with Plaid Technologies, Inc. for secure account verification. The collaboration allows for an instant and secure procedure without transmitting your sensitive banking credentials. Such data is handled solely by Plaid, which follows strict privacy practices outlined in its policy.
Did you know?
Subscribe - We publish new crypto explainer videos every week!
What is the Metaverse? (Meaning + Animated Examples)
Regular Security Audits
Coinbase maintains a comprehensive compliance program, which includes:
- Regular security audits;
- Know Your Customer (KYC) checks;
- Adherence to anti-money laundering (AML) regulations.
To validate its security and operational controls, Coinbase undergoes SOC 1 and SOC 2 Type 2 audits. These reports are conducted by Deloitte, a leading global audit firm.
The former report focuses on the effectiveness of controls over financial reporting, while the latter assesses the platform's security, availability, processing integrity, confidentiality, and privacy.
Coinbase was the first crypto custodian to receive both SOC certifications, emphasizing its commitment to maintaining robust security and compliance standards.
Additionally, the exchange has an Audit and Compliance Committee responsible for overseeing financial reporting, risk management, and regulatory compliance, including cybersecurity and information technology risks. The company also collaborates with Elliptic, a blockchain analytics firm, to strengthen its AML efforts by monitoring and investigating transactions.
📚 Read More: Why Blockchain Security Matters
User Education and Anti-Phishing Measures
To combat phishing attacks, Coinbase offers educational resources and implements features like an anti-phishing code. You can set up a unique code that appears in all official communications from the exchange, which helps to identify legitimate emails and avoid fraudulent schemes.
Take a spin on Coinbase's Mission on BitDegree to take a closer look at the exchange and see if it's really for you.
Looking for more in-depth information on related topics? We have gathered similar articles for you to spare your time. Take a look!
Coinbase’s Regulatory Measures and Compliance
How safe is Coinbase, legally? The platform has done a lot of legwork to make sure it can operate across multiple jurisdictions.
In the United States, the exchange holds state-specific money transmission licenses and follows the USA PATRIOT Act, which requires appointing a compliance officer and implementing legal procedures.[2]
The platform is also registered as a Money Services Business with the Financial Crimes Enforcement Network (FinCEN).
Additionally, Coinbase ensures that it operates under the Bank Secrecy Act (BSA), which requires transactions to be maintained for up to five years and certain records to be reported to authorities.
Globally, Coinbase has expanded its presence and obtained various licenses. It has a Major Payment Institution (MPI) license from the Monetary Authority of Singapore, allowing it to offer digital payment token services. In Europe, Coinbase is registered with the Central Bank of Ireland as a Virtual Asset Service Provider (VASP) and has the necessary authorizations in Spain and France.
However, its service availability varies by location due to regional regulations. Some countries impose restrictions on certain features, so it's important for users to check the official website to confirm what services are available in their region.
Recently, though, the US Securities and Exchange Commission (SEC) dropped a lawsuit accusing the platform of operating as an unregistered securities exchange. The withdrawal of the case marks a significant victory for Coinbase, further reinforcing its commitment to compliance and regulatory transparency.
📚 Read More: Understanding US Crypto Regulations
Coinbase’s User Experience and Feedback
Evaluating user reviews is one surefire way to find out is Coinbase safe to use. Most feedback seems to be positive, judging from its 4.1-star rating on the review aggregator website Capterra. Many praise the platform's user-friendliness and overall features.
On BitDegree’s trusted exchange ranker, Coinbase is within the top 10 of the most recommended CEXs as of writing, proving its high-quality standards in trading features and services.
Additionally, the exchange was ranked as the most trusted crypto exchange in the 2022 and 2023 YouGov surveys across the UK, Germany, India, and the US.
While it seems that Coinbase is legit, it goes without saying that user experiences may vary, and nothing under the sun is perfect. So, I encourage you to do your own research to see if the positive claims about the platform hold up.
📚 Read More: Coinbase Review
Does Coinbase Require KYC?
Yes, as mentioned previously, Coinbase requires KYC as a part of its regulatory compliance efforts.
The exchange has specific requirements that you must fulfill before you can access trading and financial services. The level of verification required depends on the user’s country of residence and the type of account they wish to open.
Typically, you must provide basic personal details, including:
- Full legal name;
- Date of birth;
- Residential address;
- Nationality.
They must match official government-issued identification documents to ensure authenticity. Providing incorrect or incomplete information may result in delays or rejection of the verification process.
Additionally, Coinbase requires users to submit a valid government-issued identification document (passport, national ID, or driver’s license). Users must upload a high-quality photo or scan of the document, ensuring all details are visible.
In some cases, Coinbase may request additional verification if the initial submission is unclear or if further authentication is needed.
As with any other platform, this exchange requires facial verification to further verify your identity. It involves uploading a live selfie or using the platform’s camera-based verification system to capture a real-time image. The system will then compare your photo with the submitted ID document to confirm authenticity.
In some cases, especially for high-value transactions or institutional accounts, Coinbase may request information about your employment status and source of funds.
All these steps might seem like a hassle, but if you’re wondering is Coinbase trustworthy, the KYC process is another strong indication that it is. The verification procedure ensures compliance with anti-money laundering regulations and helps prevent illicit financial activities, further solidifying the platform's commitment to security and transparency.
The time to complete the KYC procedure depends on multiple factors, including the volume of verification requests and the accuracy of submitted documents. Generally, it takes a few minutes to a few hours. However, in cases where manual review is required, it may take up to 48 hours. Check the status of your verification process regularly within the account dashboard.
Be aware that users who fail to complete identity verification will face not only restricted access to certain features but may also have their accounts temporarily suspended until the necessary requirements are fulfilled. In the most severe cases, failure to comply could result in permanent account closure.
Coinbase Wallet: Is It Safe?
Coinbase Wallet is a hot wallet designed to store cryptocurrencies and NFTs, offering a user-friendly interface and robust security features.
However, being a hot storage solution, it is still connected to the internet. This raises the question: Is Coinbase Wallet safe from hackers? It does offer robust security measures, but the inherent risks of an internet-connected wallet remain.
Moreover, while it is considered one of the safest hot wallets available, it may not provide the same level of protection as cold wallets like Ledger Flex, which keep your funds protected from hackers’ reach.
|
|
|
|---|---|---|
| Hardware | Software | |
| Extra Secure Crypto Storing & Managing | Best for Safely Storing Cryptos | |
| All Ledger Flex Coupons | All Coinbase Wallet Coupons | |
| Ledger Flex is a secure and user-friendly wallet with support for thousands of coins and tokens. | One of the safest software crypto wallets. | |
|
Visit site
Read review |
Visit site
Read review |
Table: Coinbase Wallet VS Ledger Flex
Regardless, the wallet employs advanced features to protect user assets. It offers biometric authentication and secure backup options to enhance account safety. It also comes with 2FA and is regularly updated to follow the best industry practices and fix possible exploits.
Not only that, but its user-friendly interface simplifies the management of digital assets, making it accessible for both beginners and experienced users. Integrating seamlessly with various decentralized applications (dApps), it allows users to interact with the broader crypto ecosystem directly from the app or browser extension.
Most importantly, it supports thousands of cryptocurrencies, allowing you to diversify your holdings.
However, some users have reported challenges with customer support. Such an issue is something to consider for those who may need assistance with their wallet.
Regardless of the hiccups, this wallet is considered a legitimate and secure option, offering a balance between usability and security. The question of “Is Coinbase Wallet safe from hackers?” ultimately depends on your commitment to maintaining strong security practices, which is the perfect segue for my next explanation.
📚 Read More: A Guide to Cryptocurrency Wallet Security
How to Protect Your Coinbase Account
As mentioned previously, there are some steps you can take to actively safeguard your account and make your Coinbase trading experience extra safe and secure.
How to Complete KYC Verification on Coinbase
Before everything, make sure to create an account on Coinbase if you don't have one yet. Afterward, completing KYC is simple with the tutorial below:
Note that it can take anywhere from a few minutes to a few days to verify your identity, depending on the volume of requests. Once completed, you’ll be notified, and your account will be fully verified, unlocking access to more features and higher withdrawal limits.
- Secure and reliable
- Accepts fiat currencies
- Lots of trading options
- Reputable exchange
- Accepts fiat currencies
- Offers various trading options
- Accepts fiat currencies
- Simple to use
- Supports only trusted cryptocurrencies
- A leading cryptocurrency exchange platform
- Best for all type investors
- Accepts fiat currencies
- Beginner-friendly
- Secure
- Decent trading and withdrawal fees
How to Activate 2FA on Coinbase
Follow the steps below:
![Is Coinbase safe: the [Security] tab.](https://assets.bitdegree.org/images/is-coinbase-safe-security.jpg "Is Coinbase safe: the [Security] tab.")
Tip
If you’re a new user, you'll need to approve via SMS. If you're an existing user updating your 2-Step Verification, approve the change using your current method. For teams with multiple users, check the [Multi-User Setup] before continuing.
That’s pretty much it! Remember that every time you log in, you will need to input the code you see in the authenticator app for validation.
Other Tips to Secure Your Coinbase Account
By now, you probably already know the factors that make Coinbase safe for beginners. Nevertheless, follow these best practices to further secure your account and protect your cryptocurrency assets:
1
Start with a strong password: Use a unique, long, and complex password. Never share it with anyone; even the employees will never ask for your credentials. For added protection, consider using a password manager.
2
Ensure email security: Since your email is a primary point of contact, enable 2FA. Regularly check for unusual filters, forwarding addresses, or unauthorized recovery emails. If you receive a suspicious message claiming to be from the exchange, forward it to [email protected].
3
Secure your devices: Protect your devices against malware like keyloggers and remote access trojans. Install antivirus software, keep your operating system and software up to date, and avoid using suspicious software or browser plugins. Always be cautious about clicking unknown links or downloading untrusted programs.
4
Strengthen cloud storage security: Google Drive or iCloud can hold sensitive data like your login credentials.
5
Use a bookmark for safe access: For safer access, always use a bookmark to visit the site to avoid phishing scams.
6
Regularly monitor your account: Check your account for recent activity, including authorized sessions, mobile applications, and devices. If you notice any anomaly, immediately remove it and change your password. If needed, contact customer support for assistance.
7
Enable Address Book allowlist: Use this feature to store and verify crypto addresses you trust, adding an extra layer of security when sending or receiving assets.
By following these methods, you can significantly reduce the risk of unauthorized access and ensure your precious holdings remain safe and secure.
Browse our collection of the most thorough Crypto Exchange related articles, guides & tutorials. Always be in the know & make informed decisions!
Conclusions
So, is Coinbase safe? Yes, it stands out as one of the most secure and trustworthy cryptocurrency exchanges available today.
Coinbase's robust security measures, such as two-factor authentication, encryption, and proactive fraud prevention protocols, give users peace of mind while performing transactions. The exchange also adheres to strict regulatory requirements, ensuring it complies with financial laws and operates within a secure framework.
Nevertheless, with the rise of cyberattacks, the safety of your funds depends on your own security practices.
Ensure that your assets are fully protected, preferably in wallets that store your holdings offline, like Ledger Flex or Stax.
The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.
Scientific References
1. Reese K., Smith T., Dutson J., Armknecht J., Cameron J., Seamons K.: 'A Usability Study of Five Two-Factor Authentication Methods';
2. McCarthy M. T.: ‘USA Patriot Act’.
About Article's Experts & Analysts
