How to Choose a Crypto Broker: A Practical Due-Diligence Checklist
Regulation, custody, fee structure, and dispute processes — the checklist we wish every new investor had.
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How to Choose a Crypto Broker: A Practical Due-Diligence Checklist
Start with the license
Before anything else, verify the broker's regulatory status directly with the relevant authority — not just via the broker's own website. In the US, that means FinCEN registration and state MTL licensing. In the EU, MiCA authorization. In the UK, FCA registration.
Custody model
- Segregated custody: Client assets held separately from broker treasury
- Insurance: Third-party coverage for hot-wallet and custodian failure
- Proof-of-reserves: Regular attestations from independent auditors
Red flags
- Vague answers about who actually holds your assets
- No public attestation history
- Withdrawal limits or delays framed as "security review"
Fee structure
Compare all-in cost, not headline spreads. Include:
- Trading commission or spread markup
- Withdrawal fees (fiat and crypto)
- Inactivity or account maintenance fees
- FX conversion spreads on multi-currency accounts
Dispute and recovery process
Confirm before funding: what happens if the broker becomes insolvent? Is there an ombudsman, an investor protection fund, a court of jurisdiction you can reach?
Track record
- How long has the broker operated?
- Any regulatory actions against it?
- What do independent review platforms say — after filtering promotional noise?
The final gate
If a broker won't answer any of the above in writing, walk away. Legitimate operators expect diligence and welcome it.
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