Crytp exchange and online brokerage – Which one makes more sense?

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What is the cryptocurrency trading situation in Singapore now?

Trading cryptocurrencies in Singapore has many ways. The most common method currently is through exchanges like Coinbase and Binance but there has been a rising trend where banks and online brokerages are offering these services too.

What is a crypto exchange?

With crypto exchanges, you can directly invest in cryptocurrency. This means you are able to transfer funds through your digital wallet. Crypto exchanges provide you with the marketplace to trade your crypto assets.

What is an online brokerage?

This is a platform that gives you an alternative to crypto exchanges. Online brokerages do offer services that are similar to ETFs where you can invest into ETPs (exchange-traded products).

What does online brokerage offer?

As an investor, you will be able to enjoy the security and convenience when you trade. Because you do not need to transfer your cryptocurrencies to an offline wallet like how you do with crypto exchanges, you do not have to be concerned about losing your wallet or hackers. When you use an online brokerage service, you transfer the security risk to the service provider instead of having to bear it yourself. That said, this means you do not own the crypto directly.

Which One Should I Choose?

This comes down to several factors. Both platforms offer benefits and challenges that you would have to face. The main issue to really take into consideration is in your security risk level. If you are do not have a high-risk appetite, then using online brokerages would be your move. Managing your own digital wallet through crypto exchanges has higher risks but it gives you more control over your assets. Hence, it would make good sense to ask questions such as:

  • Do you intend to manage and own your cryptocurrency directly?
  • What is the amount that you intend to invest in crypto?
  • Will you be able to handle the security of your own investments?

When it comes to crypto exchanges and online brokerages, choosing the right one needs careful planning and management. Moving forward, financial institutions and banks are gradually but surely taking notice of the influence and impact of cryptocurrencies. You must do your homework and find out more about what each of these platforms is offering before making the decision but there will surely be a lot more of these types of services coming up in the near future.

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