Since the collapse of FTX in 2022, many crypto investors have been treating centralized exchanges with caution. The collapse has left tens of thousands of Australians out of their pockets.
The event highlighted the inherent risks associated with treating exchanges as digital wallets with crypto-holding. Our list exchanges have a good reputation and have great features, but exchanges are notoriously susceptible to hacking.
Many exchanges offer built-in “hot wallets”, but the most experienced crypto traders often don’t use this storage method. Instead, they simply exchange coins and buy and sell cryptos in exchange, but remove crypto holdings and store them in a hardware wallet that is not connected to the internet.
The Australian government has flagged an attractive exchange of laws to obtain AFSL, requiring businesses to protect their clients’ holdings, but has not introduced any laws into Parliament so far.
If you decide to store your crypto in exchange, be aware of the risks.
