The Best Crypto Brokers List
What Is the Best Broker for Crypto?
A broker is an intermediary between a seller and a buyer in the securities, precious metals, real estate or Forex markets. There are also insurance and ship brokers, but we will not talk about them. In traditional markets, brokerage activities are regulated, trading operations are insured, and the broker is legally responsible for his activities. The broker charges a commission for his services.
How Does a Broker for Trading Crypto Act?
A crypto broker acts as an intermediary and guarantor of a transaction between a seller and a buyer in the digital asset market. Cryptocurrency brokers also provide clients with professional tools for market analysis and investment portfolio management.
A striking example of crypto brokers is OTC platforms with support for cryptocurrencies. Since 2009, Bitcoin purchase and sale transactions have taken place on specialized resources like the bitcointalk.org forum or in person. After the advent of centralized exchanges, this way of trading cryptocurrency became over-the-counter or OTC.
Experts spoke about the prospects of the OTC market for cryptocurrencies back in 2016. If earlier brokers specialized in trading securities or currencies, then with the rise in the price of Bitcoin in 2016-2017, they paid more attention to the crypto market. Large institutional players have shown a desire to provide brokerage services with cryptocurrencies.
What Is the Best Online Crypto Broker?
Over-the-counter trading (OTC)
An OTC broker acts as an intermediary between buyers and sellers of large amounts of cryptocurrencies.
Client asset management
The broker forms a crypto portfolio and manages it in real time. The broker may trade on margin on behalf of the client and use other trading methods.
Consulting and analytics
The crypto broker offers clients analytical tools that are superior to the functionality on exchanges.
Exchange trading training
Crypto broker clients can hone their trading strategies through test trades and copy trading.
What Are Cons and Pros of Working with Crypto Brokers?
Insufficient regulation. The cryptocurrency market remains poorly regulated, so non-governmental and government organizations cannot ensure the protection of client funds transferred to the management of crypto brokers. Brokers themselves face difficulties in opening bank accounts.
Crypto exchange hacks. Even exchanges with billions in trading volumes fail to avoid hacks. Brokers use crypto exchanges to manage client funds, so they also run the risk of being victims of hacker attacks.
Low anonymity. Crypto brokers approach the KYC procedure more strictly than exchanges. When registering, individuals must provide a scanned copy of their passport, and legal entities corporate documents. This policy makes it easier for a broker to work with traditional financial institutions, but may not be acceptable to users who value anonymity.
Limited set of crypto assets. Some crypto brokers do not work with confidential assets, citing KYC and AML policies.
Unlike traditional brokers, crypto brokers offer more leverage. In some cases, it reaches 1:1000 – one customer's dollar can turn into a thousand. Thus, a trader can significantly increase the volume of his transactions and profits with the same capital.
Brokerage services are also more diverse than those offered by exchanges. Crypto brokers provide analytical tools and charts to help clients build better investment portfolios and manage risk.
A crypto broker can work not only with cryptocurrencies and fiat money, but also with contracts for difference (CFDs), commodities, indices, precious metals, securities and Forex.
The client of a crypto broker is not limited to one trading instrument, therefore, with the help of a broker, you can create flexible investment portfolios from several asset classes: cryptocurrencies, metals and commodities, indices, currency pairs, stocks and derivatives, such as ETFs and CFDs.
For example, a user can make a deposit in Bitcoin, buy Apple stocks with it, while selling an index or other asset from the same account. When the crypto market falls, the client can sell the cryptocurrency and open positions in traditional assets. At the same time, the client can make a profit in the same assets that were deposited. This is not available to crypto exchange users.
A crypto broker can provide liquidity on trading floors, therefore it offers clients the opportunity to close orders in a timely manner. The broker also offers the possibility of trading with leverage and other trading methods that allow you to “play” on falling prices.
On the exchange, the user places an order and waits for it to be closed. A crypto broker, regardless of the state of the market, provides an opportunity to make a deal and thus exit the position on time. In addition, the broker works with contracts for difference (CFDs), and thanks to this, traders can play on fluctuations in cryptocurrency rates and hedge the risks associated with the volatility of digital assets. The broker also provides short selling and other trading options.
At the same time, the client can instruct the crypto-broker to manage the portfolio at his discretion without prior approval of transactions or take an active part in each transaction.
The client can transfer his assets for trust management to a PAMM account. There are also ratings for such accounts and users can automatically copy profitable strategies.
How Do I Choose a Crypto Broker?
You can choose the best crypto broker based on the following criteria:
Customer acquisition strategy: it must be effective; different marketing tools and channels must be present.
Compliance of the broker with your specific circumstances: it is necessary to understand whether the broker's service corresponds to the specifics of the legislation, the specifics of doing business and the state of the cryptocurrency industry in your region.
What trading tools and functionality are presented on the platform? A crypto broker can work with cryptocurrencies, FOREX currency pairs, metals, indices, commodities, stocks, etc. Brokers also offer leveraged trading and other trading options. You need to understand what exactly you need from this set.
How does a broker resolve legal issues? What contractor company does the broker interact with when working with the client's personal data? How effective is this support?
Team: it should include IT specialists, technical support specialists, lawyers, sales and customer support department, financiers, marketers, compliance service, designers, SMM specialists.
What payment systems does the platform support? The platform can support crypto payments, VISA and Mastercard systems, PayPal, Neteller, Skrill, etc. Who acts as a liquidity provider – exchanges, brokers or specialized liquidity providers?
Technical side: how effective is the personal account and interfaces for clients? How secure are data and funds? How is the system protected from DDoS attacks? Are cold wallets available for cryptocurrencies?
Jurisdiction: You need to understand how friendly your jurisdiction is to cryptocurrency services. Some countries, such as Great Britain, Estonia or Switzerland, are more loyal. Offshore jurisdictions, where there are practically no requirements, are much more difficult when it comes to working with banks and merchants. Does the broker have an affiliate program? Are there any bonuses for regular users?
Crypto Broker List: Potential Trends
Most likely, in the near future, the main trend will be the convergence of the functionality of cryptocurrency exchanges and brokers, and the demand for margin trading will grow.
There are only two options: either two platforms with different regulations and a set of products and services, or a single platform with different forms of work and a wide range of tools and functions.
Based on the history of the market, the second option will win. We will see universal combined platforms with several trading platforms, where the client will be able to do anything: change and trade illiquid assets on the exchange, use the investment services of a broker, conduct OTC trading, open margin accounts in various cryptocurrencies and fiat money, copy transactions of managers and invest in portfolios with different strategies. The client will be able to work on crypto, forex and traditional markets from one account. In addition, a significant advantage will be the ability to trade with a large leverage.
We should also expect the adoption of special legal acts at the level of individual jurisdictions that will regulate the activities of crypto brokers. Regardless of the further development of the market, the relevance of brokerage services will only grow. The number of brokers themselves will also increase.