Navigating Trust in Crypto Exchanges: Insights from Coincover's Report
The world of crypto is a dynamic and evolving landscape, with its fair share of triumphs and controversies. As more individuals explore the possibilities within this decentralised realm, the question of trust becomes paramount, especially when it comes to crypto exchanges. Our new ‘Securing the Future of Cryptocurrencies’ report sheds light on the prevailing sentiments, revealing a spectrum of trust levels among both crypto and non-crypto users.
The Trust Conundrum
Our research revealed that a staggering 29.6% of non-crypto users chose crypto exchanges as their least trusted financial services provider. This lack of confidence is rooted in various factors. The FTX fallout is an obvious contributor and the biggest of its kind, however a significant 43.5% of respondents being oblivious to the scandal. The aftermath of this incident has had a lasting impact, as 25.1% of non-crypto users now view the entire market with heightened scepticism.
FTX Scandal Fallout
The FTX scandal has left an indelible mark on perceptions. A notable 12% of non-crypto respondents now approach crypto providers with increased caution, emphasising the importance of due diligence when choosing a platform. Additionally, 8.3% are calling for more stringent regulatory measures, reflecting a demand for increased accountability within the industry.
- Talking of FTX, Sam Bankman-Fried court case kicked off last week. You can find out more about the scandal in BBC’s Panorama ‘Downfall of the Crypto King’ and a breakdown of the case in The Breakdown Podcast with NLW - ‘The Sam Bankman-Fried Trial – Everything you need to know’
Complete Trust in Crypto Exchanges
In contrast to the prevailing scepticism, only a mere 6% of non-crypto users express complete trust in crypto exchanges. This low level of trust is notable, positioning crypto exchanges as the least trusted financial service provider among non-crypto users, surpassing even buy now pay later services. But what isn’t clear is whether non-crypto users don’t trust exchanges due to perception, or perhaps they simply can’t trust the unknown.
The research highlights that a lack of trust in service providers forms a significant barrier to crypto investment. For 26% of non-crypto users, this lack of trust serves as a deterrent, underscoring the importance of rebuilding confidence within the industry to foster wider adoption.
Crypto Users' Perspective
Interestingly, among crypto users, the trust landscape appears more favourable. Only 5.2% of crypto users declare zero trust in crypto exchanges, while 15.2% express complete confidence. This suggests that those actively engaged in the crypto space have a more positive perception, perhaps due to firsthand experiences and a deeper understanding of the market.
Global Variances in Trust
Our global research delves into regional disparities in trust, revealing that distrust in service providers as a barrier to investing in crypto is most pronounced in France (32%) and Germany (30%). Canada emerges as the least trusting country, with 37% of respondents expressing no trust in crypto exchanges. The United States closely follows with 33%, indicating a need for concerted efforts to rebuild confidence in North American markets. This could be directly correlated to the SEC’s tough stance on crypto regulation.
Trust is the cornerstone of any financial ecosystem, and the crypto industry is no exception. Coincover's research illuminates the nuances of trust levels among users and emphasizes the need for transparency, education, and regulatory diligence to foster a more trustworthy environment. As the crypto space continues to mature, addressing these trust issues will be pivotal in unlocking its full potential and broadening its appeal to a global audience.
Download the report to find out more.