The Safety And Security Of Australian Crypto Exchanges

Security is one of the major things that crypto-traders and enthusiasts have to always keep in mind. This is nowhere truer than when trading with a cryptocurrency exchange. The risk of potential loss to hackers, commonly known as cryptojackers, can lead to dissatisfaction. It’s vital for interested individuals to thoroughly check the security details of an exchange before trading.

This article explores the safety and security attributes of Australian cryptocurrency exchanges. This is a good example of this is Independent Reserve, which has a high degree of security protocols in place. Let’s delve into the criteria to consider when selecting a secure cryptocurrency exchange in Australia.

What to Look for When Searching for a Safe Australian Crypto Exchange

Discerning the safety of a crypto exchange may pose a challenge for consumers, especially given the industry’s relative youth. Trustworthy exchanges such as Independent Reserve that ensure the security of assets, may be difficult for newcomers to identify.

To initiate the selection process, registration with AUSTRAC becomes a mandatory requirement for all digital currency exchanges in Australia. Additionally, various government and non-government industry organizations are aligned with by most digital currency exchanges to underscore their legitimacy. Organizations like Blockchain Australia, Blockchain Association Singapore and FinTech Australia are valuable starting points for this purpose. Recognition through awards received by the exchange can further contribute to legitimizing the platform.

For an added layer of assurance, consumers are encouraged to seek a crypto exchange with its head office based in Australia.

Features to Look For When Choosing a Secure Cryptocurrency Exchange

Ensuring the utmost security remains the top priority for the cryptocurrency exchange platform, as it strives to provide a trustworthy environment for transactions. Independent Reserve is a good example of a crypto exchange that prioritises security over everything else. An overview of the security measures that a safe Australian Crypto Exchange like Independent Reserve employs includes the following:

Client Asset Treatment

⦁ No Commingling of Funds: Customer funds should be kept entirely separate from the platform’s own.

⦁ 1:1 Reserves: The platform should maintain a full 1:1 reserve of all client fiat and digital assets.

⦁ Secure Cold Storage: The majority of digital assets should be stored in secure offline cold storage within highly secure vaults.

⦁ Audited and Licensed: The platform should have external auditors conduct annual audits, verifying all fiat and crypto balances held in custody.

⦁ Segregated Funds: The crypto exchange should maintain complete segregation of customer funds to facilitate easy and secure withdrawals.

⦁ Single Purpose Asset Utilization: The platform should refrain from engaging in any lending, borrowing, or rehypothecation of assets. Client assets are used solely for transactional purposes.

⦁ Trusted by Global Partners: The platform should have existing global partners that can provide more legitimacy to the brand behind it. For example, Independent Exchange, a reputed Australian crypto exchange has forged partnerships with companies such as DBS, Fireblocks, Ripple, Refinitiv, and Bloomberg.

Platform Security Features

Account Security: The crypto exchange should provide 2-Factor Authentication (2FA) with Google Authenticator and optional SMS backup. It should also have an option of changeable username and email address with email notifications for each login. Other security measures that should be present include instant account suspension for unauthorized logins and duress password for account suspension.

Additional Security Measures: Cryptocurrency exchanges should block  instant withdrawals for 72 hours after account security changes. It should provide SMS notifications on account security detail modifications and other features such as address whitelisting and browser whitelisting for added security.

Bot Shield: This is a relatively new feature that safe cryptocurrency exchanges should have. It provides automatic account protection against brute force attacks.

Encryption of Personally Identifiable Information: A safe cryptocurrency exchange must prioritize the encryption of personally identifiable information during transmission and storage. This involves employing physically dispersed keys to ensure robust protection against unauthorized access. Additionally, all verification documents are meticulously watermarked and encrypted, accessible only to authorized administrators who play a crucial role in maintaining the platform’s security.

Secure Connections: To uphold security standards, a reputable cryptocurrency exchange ensures enforced secure connections for both website and API access. This proactive measure guarantees that user interactions with the platform occur within a protected environment, minimizing the risk of data breaches and unauthorized activities.

Data Center Security: A safe cryptocurrency exchange Like Independent Reserve goes beyond the basics by housing its operations in top-tier data centers equipped with geographically dispersed disaster recovery backup servers. Adopting a custom-designed framework rather than depending on off-the-shelf systems, the platform undergoes intricate crafting with security at its core. This level of security makes it completely fool-proof, with the crypto exchange capable of delivering services properly to its clients, even in the face of any data breach. 

Intrusion Detection: Continuous monitoring for unauthorized system access is a fundamental element of operational security. Robust intrusion detection systems are deployed by a secure cryptocurrency exchange to promptly identify and respond to any suspicious activities. This approach effectively mitigates potential threats and ensures the protection of user assets.

Hot Wallet Security: Prioritizing optimal safety, a secure exchange stores over 97% of cryptocurrency in cold storage. The hot wallet, reserved for immediate transactions with a smaller asset percentage, employs multi-layer encryption for its private keys. This strategic utilization of geographically dispersed keys introduces an additional layer of protection, effectively preventing unauthorized access.

Cold Storage Measures: Emphasizing security, a trustworthy cryptocurrency exchange stores over 97% of digital assets in multiple geographically dispersed vaults with extensive physical security measures. Multi-signature withdrawals, requiring approvals from multiple authorized individuals, further enhance the protection of assets stored in cold storage.

Regular Testing: Regular penetration testing and bug bounty programs help to maintain operational security. A safe cryptocurrency exchange remains attentive by regularly monitoring its system’s resistance to possible attacks, assuring the platform’s continued integrity and security.

Administrator Access and Employee Checks: Tiered access for administrators, coupled with audited actions and multi-level approvals, is integral to operational security. In addition, regular police checks on all administrators with system access contribute to the robustness of the cryptocurrency exchange’s operational security measures. These meticulous checks help ensure that those entrusted with system access meet high standards of integrity and reliability.

What does it mean if a crypto exchange is registered with AUSTRAC and Blockchain Australia?

Being registered with AUSTRAC signifies that a crypto exchange adheres to industry standards, particularly emphasizing Anti-Money Laundering (AML) measures and security. This registration ensures compliance and positions the platform to deliver a high standard of service to retail customers, small enterprises, and large institutions, including self-managed superannuation funds (SMSFs).

Membership in Blockchain Australia holds significance for exchanges, as it aligns them with the foremost industry body for Australian businesses and professionals engaged in the digital economy through blockchain technology. By being a member, exchanges actively contribute to advancing the adoption of blockchain technology in Australia. 

This commitment involves assuming a seat among local industry experts, collaborating on discussions, education, and advocating for regulatory and policy settings conducive to the growth of blockchain technologies in the country. Exchange platforms that partner with Blockchain Australia demonstrate their dedication to collective efforts aimed at fostering the use of blockchain technologies in Australia.

Conclusion

Making safety a top priority in Australian cryptocurrency trading is essential. Although the cryptocurrency market poses risks, opting for a secure exchange significantly reduces potential threats and hacks. It is important to underscore that, in addition to prioritizing security, your selected exchange should align with your unique trading preferences and requirements.