Coinbase is one of the largest trading platforms in America, and given the stories going around in the crypto space, it is no wonder people are worried if their investments are secured. Coinbase ensures its cryptocurrencies and cash balances differently. The digital assets are covered using crime insurance which protects you from theft and other security breaches. In addition, cash balances for U.S. customers are insured by the Federal Deposit Insurance Corporation (FDIC).
What Is Coinbase?
Coinbase is a trading platform that allows users to trade in both fiat money (U.S. Dollars, Euros, etc.) and several currencies (bitcoin, etherium, etc.). The platform is separated into Coinbase and Coinbase Pro to cater to the needs of beginners and advanced traders.
Coinbase fees differ on what version of the platform you are using; usually, fees range from 0-0.50% per trade and 2.49% on card transactions.
The beginner version of the app supports up to 100 cryptocurrencies, while the advanced pro version supports more than 250 cryptocurrencies.
Generally speaking, Coinbase is a secure platform to carry out your trading activities. The app features multiple security features such as two-step verification, biometric login, AES-265 encryption for digital wallets, and insurance on USD balances.
|For beginners||For advanced traders|
|0%-0.50% per trade, 2.49% on card transactions||0%-0.50% per trade|
|Supports 100+ cryptocurrencies||Supports 250+ cryptocurrencies|
Insurance On Cryptocurrency
For cryptocurrencies, Coinbase uses crime insurance to protect your digital assets. This insurance covers theft and other forms of cybersecurity breaches.
Note that the insurance policy does not cover losses that arise from unauthorized access to your account, even if your credentials were breached. Remember, it is your personal responsibility to ensure sensitive information such as your account login details are, kept safe.
Also, bear in mind that unlike most currencies such as the American Dollar, cryptocurrencies are not legal tenders. Examples of cryptocurrencies include bitcoin, litecoin, etherium, dogecoin, etc.
Because cryptocurrencies are not backed by the U.S. government, they are not subject to the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation.
Where there is a case of loss covered by Coinbase insurance policy on cryptocurrencies, rest assured you will be repaid and made whole.
However, it is advisable to keep in mind that the insurance company may not be able to fully restore you as sometimes the total losses borne exceed the recovered amount from insurance.
Insurance On Cash
Balances on legal tenders such as U.S. Dollars, Great British Pounds, and Euros are held in what Coinbase calls an e-money wallet.
For customers in America, the dollar balance of all customers is combined and:
1. Held in custodial accounts at U.S. banks and
2. invested in liquid U.S. Treasuries, or
3. Or kept in USD denominated money market funds in accordance with state money transmitter laws.
Coinbase may decide to hold your money in any of the three methods mentioned above, so do not assume that there is a preference for one over the other.
For Coinbase users outside America. Their funds are held as cash in a custodial account. These funds are held separately from company funds, so one should not expect that the company will use this money for operational expenses or any corporate use.
U.S. customer funds held as cash in custodial accounts are insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC covers each individual to the limit of $250,000.
FDIC’s pass-through insurance protects funds held on behalf of Coinbase customers against losses so long as the bank where the money is held is insured by the FDIC.
FDIC’s coverage is dependent on the customer information remitted to then by Coinbase. On this note, it is important that you take extra care when submitting your information to Coinbase to ensure you do not risk being ineligible for coverage.
Getting Scammed On Coinbase- How High Is The Risk?
The risk of getting scammed on Coinbase is typically the same as with any other crypto trading platform. However, we should mention that crypto transactions are irreversible. Only carry out transactions with entities that you trust.
Today fraudsters are skilled in deceiving unsuspecting victims by impersonating customer care agents. Coinbase is no exception; these fraudsters are
Frequently Asked Questions
What Is The Difference Between Coinbase And Coinbase Pro?
Both platforms have the same function, and the differences are minor. Coinbase is made for beginner traders as the platform is easy to navigate, while the Pro version has more advanced options for seasoned traders.
I Got Scammed On Coinbase; What Do I Do?
If you suspect that your account has been compromised, you can reach out to a customer care agent from Coinbase to initiate a refund on the unauthorized transaction.
Does Coinbase Report To The IRS?
Yes, they do. Coinbase reports its transactions to the IRS for tax purposes. U.S. investors who gain more than $600 on trading activities are sent a form called form 1099.
Is Coinbase Regulated?
Yes, Coinbase is regulated. They comply with all laws and regulations applicable where they are operating.
Coinbase ranks among the most popular crypto trading platforms in the market. In terms of safety, it is difficult to say it is better or worse than other trading platforms.
The key thing is for users to take their security into their hands instead of relying on these platforms that do not have much to lose.
By creating difficult passwords and using novel email addresses, users can give hackers are tougher time in carrying out crime. Lastly, we would advise users to research properly on what they are getting into.