Crypto investors should prioritize security when making any transaction within the decentralized ecosytem. Before venturing into this arena, you must be aware of the threat from hackers, risky business practices, and regulatory uncertainty. One way to ensure you keep your assets safe is to choose a secure and reliable exchange on which to trade, buy, and sell your assets. This guide looks specifically at options for traders and investors in Canada. Here are the leading secure crypto platforms in the region.
Most secure crypto platforms in Canada
Coinbase
Coinbase is a digital currency exchange headquartered in San Francisco, California. The leading CEX was founded in June 2012 by Brian Armstrong and Fred Ehrsam. The global platform allows users to buy, sell, transfer, and store digital currency.
Coinbase also provides various other services such as merchant solutions to accept cryptocurrencies as payment, through multiple deposit methods such as Interac e-Transfer, and a wallet service for retail users.
Notably, Coinbase has played a significant role in mainstreaming the use of crypto. It provides a user-friendly platform that adheres to regulatory standards in various jurisdictions. As a result, Coinbase has gained a reputation as a top drawer, highly trusted exchange in Canada.
Coinbase enhances asset security using secure Multiparty Computation to split cryptographic keys, eliminating a single point of failure. Each transaction is verified through set policies to avoid key misuse.
Customer assets are protected in bankruptcy remote accounts separate from the company’s finances. Both Coinbase’s exchange and Coinbase Custody are regulated under the NYDFS. In the event of a security breach, Coinbase carries crime insurance that protects a portion of customer’s assets.
The platform mandates two-factor authentication for all accounts, offers robust password management tools, and provides enhanced account protections.
Users can lock their accounts if security is breached. The Coinbase Vault secures large balances with time-delayed withdrawals and multiple approvals. Proactive security notifications and prompts guard against suspicious activity and risky transactions.
Kraken
Kraken is a cryptocurrency exchange based in the United States, founded in 2011. It was one of the first bitcoin exchanges to be listed on the Bloomberg Terminal.
Kraken was co-founded by Jesse Powell, who is an alumnus of California State University, Sacramento, along with Thanh Luu and Michael Gronager. Kraken officially launched in September 2013, initially offering bitcoin, litecoin, and euro trades before expanding to additional currencies and margin trading. The exchange offers multiple products, such as spot and margin trading, futures, NFTs, and staking (regional restrictions apply).
Kraken provides an array of security features to protect its customers. The exchange uses advanced cold storage and hot wallet solutions, requiring multiple parties from various teams to perform cryptographic approvals to move funds.
Their infrastructure is under constant surveillance with armed guards, alarm systems, and video monitors. Kraken also employs a dedicated team to identify vulnerabilities within their infrastructure and applications.
They have a bug bounty program to engage the broader security community in finding potential exploits. Some of Kraken’s other security features include:
• FIDO2-based two-factor authentication
• A global settings lock to prevent unauthorized changes to accounts, including crypto withdrawal addresses
• AI-based analysis to detect compromised accounts.
Kraken uses the latest encryption standards for all sensitive account information at both the system and data levels, ensuring personal identifying information is secure. Kraken has earned an ISO 27001 certification for these security procedures and controls.
Bitbuy
Bitbuy is a Canadian cryptocurrency trading platform that provides users with a marketplace for buying and selling various cryptocurrencies. It was founded in Toronto, Canada.
The platform was established in 2016 and was initially known as InstaBT. InstaBT was created in 2013 by Adam Goldman and Ademar Gonzalez. Over time, Bitbuy has evolved to offer additional services and support more cryptocurrencies, catering to both retail and institutional clients.
Bitbuy emphasizes compliance and security and is known for being one of the more regulated and transparent cryptocurrency exchanges in Canada. It is important to note that Coinberry and Coinsmart have merged with the platform. The transfer and merging of customer accounts to Bitbuy suggest a consolidation under the shared ownership of WonderFi Technologies Inc.
Bitbuy’s digital assets are held with Fireblocks, Coinbase Custoday, and Bitgo, a licensed custodian. This partnership includes insurance from Bitgo and additional coverage provided by Bitbuy’s own crime policy for their cold storage wallets.
A significant portion of the digital assets on Bitbuy is kept in cold storage, which is considered the most secure method for storing digital assets. Bitbuy’s infrastructure supports various cryptocurrencies and tokens and ensures transparent accounting of all exchange-traded assets through its Proof-of-Solvency.
The platform conducts routine financial audits, security audits, and transaction reporting audits, as well as daily and weekly reviews for suspicious activities, utilizing trusted third parties. As a Canadian registered marketplace for crypto assets, Bitbuy is federally approved as a Restricted Dealer and registered with FINTRAC as a money services business
Bitbuy also has implemented advanced 2FA, which requires two forms of identification when logging in or executing a trade. This typically involves a combination of a password and a confirmation on a smartphone.
NDAX
NDAX, which stands for Next Generation Digital Asset Exchange, is a Canadian cryptocurrency exchange and trading platform. It was created to facilitate the trading of various cryptocurrencies, including bitcoin, ethereum, dogecoin, and others. NDAX was launched in 2018 and is exclusively available to Canadian users. It caters to both individual and institutional traders and investors, driving the adoption of cryptocurrency in Canada.
NDAX employs several security measures to protect its users’ funds and information. Some of the main security features provided by NDAX are:
• Mandatory two-factor authentication (2FA) for account withdrawals and deposits.
• User fiat funds are kept in segregated bank accounts at a Canadian Crown-owned financial institution, separate from NDAX’s operating capital.
• Registration with FINTRAC and AMF as a Money Service Business, adhering to PCMLTFA and other regulations.
• KYC processes aligned with industry best practices.
• Protection against service attacks with DDoS mitigation.
Additionally, NDAX has protection insurance for their hot and cold storage assets, indicating some form of insurance for customer funds, but does not provide details on the policy coverage.
NDAX stores most of its digital assets in cold storage, which is offline and secured with multi-signature technology from Ledger Vault, a top provider of security and infrastructure for cryptocurrencies. In cases of insurable events such as fraud, NDAX’s coverage includes:
• USD 5 million for its cold wallets, protecting against internal theft and Hardware Security Module (HSM) failures.
• USD 3 million per incident for its hot wallets.
• CAD 5 million for general business liability.
Wealthsimple
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Wealthsimple is an online investment management service and self-directed investment platform that facilitates the buying and selling of stocks, options, crypto, and exchange-traded funds (ETFs) on major Canadian and U.S. exchanges.
The company was founded in September 2014. It was established by Michael Katchen, Brett Huneycutt, and Rudy Adler and is based in Toronto, Canada.
Wealthsimple has partnered with Gemini Trust Company LLC to hold cryptocurrency coins offline, away from potential online threats. Gemini Custody, a cryptocurrency exchange and custodian, is regulated by the New York State Department of Financial Services.
Gemini, Wealthsimple’s custodian, maintains a commercial criminal insurance policy of up to $200,000,000. This policy insures against the theft of cryptocurrency resulting from a security breach or hack, employee theft, or fraudulent transfer.
For cryptocurrency accounts, Wealthsimple and its custodial partners hold over $500 million in insurance to protect against theft due to security breaches, hacks, or internal fraud. However, this policy does not cover losses from unauthorized access to accounts.
Wealthsimple Crypto is offered under a time-limited regulatory approach through the CSA’s Regulatory Sandbox, which imposes strict compliance rules. Additionally, Wealthsimple protects accounts with two-step verification, also known as 2FA or MFA.
Secure crypto platform features
There are a number of important factors to consider when choosing a secure crypto platform, regardless of whether you are Canada-based. The security features will largely depend on the platform type, but there are a few features you should look for regardless.
Proof of reserves
This category can vary by platform, but generally, the underlying idea is that the platform produces some form of financial statement or audit to prove its solvency. In crypto, exchanges typically show proof of reserves (PoR) or attestations.
PoR tech & adoption is inflecting, and providing assurances that trad. audits do not! PoR is not substitute for an audit, but a complement.
Nic Carter, co-founder of Coin Metrics: X (Twitter)
While in practice, it is often a skipped step, it’s important to be aware of financial statements when selecting a secure crypto platform. Not considering a platform’s solvency could lead to significant losses in the event of bankruptcy.
Segregated assets
Boasting segregated assets typically means that if a business has multiple companies, accounts are separate from each other. This prevents any comingling of funds. The collapse of FTX in 2022 partly occurred because the company did not have segregated assets. Instead, customer funds were put at risk and transferred between FTX and its sister company, Alameda Research.
In another instance, assets are segregated in bankruptcy remote accounts. Typically, when creditors are unsecured, meaning when you give your money/assets to a business, secured creditors are paid before unsecured creditors with company assets.
In other words, secured creditors are paid, while unsecured creditors receive the leftovers, if any. When assets are bankruptcy remote, creditors are paid regardless.
Cold storage
When it comes to secure crypto platforms and decentralized assets in general, cold storage is the industry standard. Cold storage keeps crypto offline.
Typically, a company will have even more security measures, such as multi-party or multi-signature encrypted software, offering additional layers of defense.
The company may also restrict access to cold wallets to a few key individuals. This enhances security and limits points of failure. If the company has no in-house custody facilities, it may use a custody firm like Coinbase Custody, Fireblocks, or Bitgo.
Account protections
A secure crypto platform not only protects your assets — it empowers you to protect them as well. In practice, this can look like:
- MFA/2FA: Multi-factor authentication is a common practice for securing accounts. It typically uses a phone number, email, or authenticator app to create multiple barriers of defense for users.
- Address whitelisting: Some crypto platforms require you to whitelist or verify certain addresses before withdrawing your crypto. This prevents hackers from sending your crypto to un-sanctioned addresses.
- Biometric verification: Some platforms use fingerprints, facial recognition, or voice recognition for identity verification. Although some people may be skeptical of giving out their personal data, the option is there regardless.
- Account recovery: If you are locked out of your account — or you lock your account due to suspicious activity — a provider will have a process for you to regain your account. This typically looks like password resets, some encrypted file for recovery, a face scan, or any similar method to prove your identity.
- Mobile device recognition: Recognizes trusted devices and alerts users if an unknown device attempts to access their account.
- Time-delayed withdrawals: On a crypto platform, time-delayed withdrawals enhance security by providing a buffer period to detect and prevent unauthorized transactions.
- Email and SMS alerts: Notifies users of account activities, such as logins from new devices or locations and large transactions.
- Beneficiary designation: Allowing users to nominate a beneficiary who can claim the account or its assets in the event of the user’s death.
- Legacy contact: Some platforms allow users to designate a legacy contact who can access or manage the account in specific circumstances.
Transparency
As blockchain and web3 ecosystems evolve, transparency is increasingly crucial. Secure crypto platforms should explain their business operations as much as possible, what businesses they operate, and how they use customer’s funds.
It is not uncommon for a crypto exchange to state in bold letters that they do not loan customer’s funds, especially given the stigma caused by the FTX collapse.
If a platform operates a lending business or is a dealer, it should have operational independence from its exchange or wallet services.
They should also separate entities or divisions. Each business should have its own governance and risk management protocols to prevent contagion risks. In practice, this means separate bank accounts for businesses that the company owns or separating regional operations to remain compliant.
Choose a crypto platform carefully
Since events of late 2022 led to a market-wide sell-off and a subsequent flight from crypto businesses, users are demanding better security and increased transparency — and rightfully so. Even total beginners are more educated and aware of the risks associated with not only crypto but all centralized operations. When looking for a secure crypto platform available in Canada, you can save yourself anxiety and losses by considering the aforementioned criteria. Note that profit is never guaranteed in crypto investing, and as well as prioritizing a secure and transparent exchange, you should also pay close attention to crypto wallet security.
Frequently asked questions
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