How to choose a Bitcoin exchange: licence, fees and custody checks

A Bitcoin exchange is only worth using if it is registered or licensed where you live, shows its fees before you trade, lets you withdraw your coins to your own wallet and is honest about what happens to your money if the firm fails. There is no single best trading platform for cryptocurrency, so this page gives you checks to apply to any provider instead of a ranking. It names no winner and has no referral links. The checks cover the licence, the fees, custody, withdrawals and the red flags of a fake platform. They take about as long as signing up, so do them before you deposit anything.

Bitcoin exchange or crypto broker: what is the difference

An exchange matches buyers and sellers. You usually see an order book, and you can normally deposit coins and withdraw them again. A broker or app works differently: it sells coins to you at a price it quotes, and its cost is often built into the gap between the buy and sell price. Some brokers do not let you move coins out, so ask before you buy.

Many firms do both jobs and also hold your coins. The SEC warns that a platform combining exchange, broker and custody functions creates conflicts of interest. This page uses "exchange" for all of them, and "cryptocurrency broker" only where a rule treats brokers separately.

Check the licence before anything else

Licensing is the first filter, and the rules differ by country, so use the section that matches where you live.

In the UK: the FCA register and warning list

If you are looking for a cryptocurrency broker in the UK, start with the Financial Conduct Authority (FCA). UK crypto businesses must be registered with the FCA under the Money Laundering Regulations. The FCA's cryptoassets page states that this entry shows registration for anti-money laundering purposes only. It says nothing about whether your money is safe.

The FCA's new cryptoasset regime is expected to come into force on 25 October 2027. Until then, the FCA's crypto rules mainly cover anti-money laundering registration and how firms promote crypto to consumers (financial promotions).

To check a firm:

1. Search for it on the Financial Services Register and compare the name, address and website.
2. Check the FCA warning list, including the FCA's list of unregistered cryptoasset businesses.
3. Watch for clone firms, which copy a real firm's details and usually make contact out of the blue.
4. If a firm claims to be on the register but you cannot find it, call the FCA Consumer Helpline on 0800 111 6768.

Since 8 October 2023, the first time you respond to a crypto firm's direct offer and have not invested with that firm before, it must give you a 24-hour cooling-off period and check whether the product is appropriate for you. This is a protection, not a guarantee.

In the US: state licences and New York's BitLicense

Federal regulators cover some crypto activities, but much of the licensing for exchanges happens at state level, so check the financial regulator in your state before you open an account. New York is a useful example. A virtual currency business there needs a BitLicense from the New York State Department of Financial Services (NYDFS) or a New York banking charter, and a firm that also transmits money may need a separate money transmission licence. If a firm says it is licensed, ask which licence and look it up with that regulator.

In the EU: MiCA authorisation

If you use an EU-based provider, the transitional period of the Markets in Crypto-Assets Regulation (MiCA) ended on 1 July 2026, and any firm offering crypto services to EU clients without MiCA authorisation must stop. ESMA, the EU securities regulator, tells investors to check that their provider is an authorised crypto asset service provider, and keeps an interim register of them. MiCA protections apply only to the legal entity authorised in the EU, so check which entity your contract is with.

Compare the full cost, not the headline fee

A low trading fee can sit next to a wide spread or an expensive withdrawal. Look for each of these costs:

Before your first trade, check the total cost on the confirmation screen for the amount you plan to buy, and what it would cost to withdraw the same coins again. Bitcoin ATMs have their own fees and rules, so read that guide separately if you plan to use one.

Who holds your coins: custody

If an exchange holds your coins, it controls the keys. The SEC's custody bulletin explains that if a third-party custodian is hacked, shuts down or goes bankrupt, you may lose access to your assets.

Bank or broker protections do not automatically carry over. In the US, SEC staff say non-security crypto assets are not protected by the Securities Investor Protection Act (SIPA), and they may not be protected by any other specific insolvency regime. In the UK, the FCA says it is highly unlikely you will be covered by the Financial Services Compensation Scheme (FSCS) for crypto losses, and FCA registration does not give you access to the Financial Ombudsman.

FTX shows why this matters. On 28 March 2024, its founder Sam Bankman-Fried was sentenced to 25 years in prison after a jury convicted him on seven fraud and conspiracy counts. They included stealing money from customers who had put it into FTX accounts.

The alternative is to withdraw your coins to a wallet you control. That gives you sole control and sole responsibility, so a lost seed phrase or hacked wallet can mean permanent loss. Consider moving coins to a hardware wallet.

What proof of reserves does and does not tell you

Some exchanges publish a proof of reserves report, which shows assets at one point in time. On 8 March 2023, the investor advocate at the US Public Company Accounting Oversight Board (PCAOB) warned investors that these reports do not cover liabilities, are not audits under PCAOB standards and do not provide meaningful assurance. The SEC adds that a report may not disclose what management did between snapshots, and it tells investors to use extreme caution when relying on one.

Treat a published report as one signal, not as proof that the firm can repay every customer.

Run a small withdrawal test

Before you move a larger amount, test the whole path with a small one:

1. Deposit a small sum.
2. Buy a small amount of bitcoin.
3. Withdraw some of it to your own wallet.
4. Withdraw some cash back to your bank.

Note how long each step took, the fees shown and any extra identity checks. The test itself costs fees. Copy the address from your own wallet and check that the network matches, because a transfer sent to the wrong address or network usually cannot be reversed. A passed test shows the process works today; it does not prove the firm is solvent or that larger withdrawals will go through. If withdrawals are blocked, or delayed until you pay new "fees" or "taxes", stop depositing. This is a safety check on the provider, not trading advice.

Red flags of a fake crypto platform

Fake platforms look professional, and the trouble starts at withdrawal. Walk away if you see any of these:

• You were contacted out of the blue, or through an ad that features a celebrity.
• The firm is not on the FCA register, or on your state regulator's list.
• It promises returns.
• You are asked to pay a fee before a withdrawal is released.
• An "account manager" keeps pushing you to deposit more.
• The site is little more than a sign-up form.

Under its previous owner, this domain ran that kind of funnel until March 2026; a new owner re-registered it in October 2026. See how the Bitcoin Billionaire funnel worked and common crypto scams.

Records and tax after you choose

In the US, the IRS treats digital assets as property, not currency. Brokers report gross proceeds on Form 1099-DA for transactions from 1 January 2025, and they report basis on certain transactions from 1 January 2026.

In the UK, from 1 January 2026, crypto providers covered by the new reporting rules ask you for your name, date of birth, address, country of residence and tax ID. They must submit their first report on 2026 data by 31 May 2027. Our guide to UK crypto tax rules covers your own records.

How to choose a crypto exchange: the checklist

Use this list for any provider, then read our guide to buying and selling crypto for the next steps.

1. It is registered or licensed where you live, and you checked the register yourself.
2. It does not appear on a regulator's warning list.
3. You checked the full cost, including the cost of withdrawing.
4. You know who holds the coins and you can withdraw them.
5. You read proof of reserves as one signal only.
6. It passed your small withdrawal test.

Frequently asked questions