Crypto.com is a registered cryptocurrency exchange and financial services platform, but it is not a bank and carries different risks than traditional financial institutions

Crypto.com is a real company incorporated in Hong Kong with offices in multiple countries, including the United States. It operates as a cryptocurrency exchange — a platform where you can buy, sell, and trade digital currencies — and also offers a debit card, lending services, and a rewards program. The company is not a bank, which means your money is not protected by the same government insurance that covers bank deposits.

Whether Crypto.com is right for you depends on what you want to do with it and how much risk you are comfortable taking. The company has been operating since 2016 and has gone through regulatory scrutiny, including a $700 million settlement with U.S. regulators in 2023 for operating an unregistered securities exchange and making false claims about insurance. Understanding what Crypto.com actually is, how it is regulated, and what can go wrong will help you decide whether to use it.

Key Takeaways

  • Crypto.com is a real company registered in Hong Kong that lets you buy and sell cryptocurrencies, but it is not a bank and your money is not insured by the government.
  • The company has faced regulatory action in the United States, including a $700 million settlement in 2023 for operating without proper registration and making false insurance claims.
  • Your cryptocurrency holdings on Crypto.com are at risk if the company fails, is hacked, or freezes your account, and you may not be able to recover your money.
  • Crypto.com is regulated in some jurisdictions but not others, and the level of protection varies depending on where you live and what service you use.
  • If you use Crypto.com, you should only deposit money you can afford to lose and keep most of your cryptocurrency in a personal wallet you control.

How Crypto.com is regulated and what that means for your money

Crypto.com holds licenses in some countries but operates in a legal gray area in others. In the United States, the company is registered as a Money Services Business in certain states and holds a BitLicense in New York, which allows it to offer cryptocurrency services. However, the 2023 settlement with the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) found that Crypto.com had been operating parts of its business without proper registration.

Regulation does not mean your money is protected the way it would be at a bank. Banks are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per account. Cryptocurrency exchanges like Crypto.com do not have this insurance. If Crypto.com goes out of business, is hacked, or freezes your account, you may lose your money with no way to recover it. Some exchanges carry private insurance, but the coverage is limited and does not protect against all types of loss.

In other countries, Crypto.com's regulatory status varies. The company holds licenses in some European countries and Singapore, but the rules are different in each place. Before you use Crypto.com, check whether it is regulated in your country and what protections, if any, explore to your account.

The 2023 settlement and what regulators found

In June 2023, Crypto.com agreed to pay $700 million to settle charges brought by the SEC and CFTC. The regulators found that the company had operated an unregistered securities exchange and unregistered futures trading platform, and had made false claims about insurance coverage. Specifically, Crypto.com had advertised that customer assets were insured, but the insurance did not cover the types of losses customers might actually face.

The settlement required Crypto.com to stop offering certain services in the United States, improve its compliance procedures, and pay a large fine. The company did not admit wrongdoing as part of the settlement. This action shows that Crypto.com had been operating without proper oversight and had misled customers about how protected their money was. It does not mean the company is shutting down, but it does mean the company was found to have broken the law.

What happens to your money if Crypto.com fails

If Crypto.com goes bankrupt or is forced to shut down, your cryptocurrency and money on the platform may be lost. Unlike a bank, there is no government fund that will reimburse you. The company's bankruptcy process would involve creditors and courts fighting over whatever assets remain, and cryptocurrency customers often rank low in the payment order.

This risk became real for many people in 2022 when FTX, another major cryptocurrency exchange, collapsed suddenly. Customers who had money on FTX lost access to it, and recovery has been slow and incomplete. Crypto.com has not collapsed, but the FTX failure showed that even large, well-known exchanges can fail without warning.

To reduce this risk, cryptocurrency experts recommend keeping most of your holdings in a personal wallet — software or hardware you control directly — rather than leaving it on an exchange. You should only keep on Crypto.com the amount you plan to trade or use soon.

How Crypto.com makes money and what that means for you

Crypto.com makes money from trading fees, which you pay when you buy or sell cryptocurrency on the platform. The company also earns money from its debit card program, where customers lock up cryptocurrency to earn rewards and cashback. These business models create incentives for the company to encourage you to trade frequently and keep money on the platform.

The rewards program is designed to be attractive — you can earn cashback and other benefits — but it requires you to hold cryptocurrency on Crypto.com rather than in your own wallet. This benefits the company because it keeps your money on their platform, where they can use it or lend it out. It also increases your risk, because your money is no longer in your direct control.

Comparing Crypto.com to other exchanges

Crypto.com is one of many cryptocurrency exchanges. Other large platforms include Coinbase, Kraken, and Gemini. These exchanges differ in their regulatory status, fees, features, and track record. Coinbase, for example, is a publicly traded company in the United States and has faced fewer regulatory actions than Crypto.com, though it has also faced SEC scrutiny. Kraken is privately held and is regulated in some European countries.

No cryptocurrency exchange is risk-free. All of them operate in a less-regulated environment than banks, and all of them could potentially fail or be hacked. The differences are in the degree of regulation, the company's track record, and the specific risks each one has taken. Before you choose an exchange, compare their regulatory status, fee structure, and what other users have experienced.

Red flags and what to watch for

If you decide to use Crypto.com, watch for these warning signs. Do not trust promises of may provide returns or insurance that sounds too good to be true — the 2023 settlement showed that Crypto.com had made false insurance claims in the past. Be cautious if the company suddenly changes its terms of service or restricts your ability to withdraw money. Do not enable features that automatically lend out your cryptocurrency or stake it in ways you do not fully understand.

Also be aware of phishing scams and fake Crypto.com websites. Scammers create fake login pages that look like Crypto.com to steal your password. Always type the web address directly into your browser rather than clicking a link in an email or text message. Enable two-factor authentication on your account to make it harder for someone to break in.

Frequently Asked Questions

Is my money insured if I keep it on Crypto.com?

No. Crypto.com does not have government insurance like banks do. The company carries some private insurance, but it does not cover all types of loss and the coverage is limited. If Crypto.com is hacked or goes out of business, you may lose your money.

Why did Crypto.com have to pay $700 million?

U.S. regulators found that Crypto.com was operating an unregistered securities exchange and futures platform, and had made false claims about insurance coverage. The settlement required the company to pay a fine and change how it operates.

Is Crypto.com safer than other cryptocurrency exchanges?

Crypto.com has faced more regulatory action than some other exchanges, but that does not mean other exchanges are completely safe. All cryptocurrency exchanges carry risk. Compare their regulatory status, track record, and what protections they offer before you choose one.

What should I do if I want to use cryptocurrency but am worried about Crypto.com?

You can use a different exchange, or you can use Crypto.com but only deposit money you can afford to lose and move most of your cryptocurrency to a personal wallet you control. A personal wallet removes the risk that the exchange will fail or be hacked, but it requires you to manage your own security.

Can I get my money back if Crypto.com goes out of business?

Probably not quickly, and possibly not at all. Unlike bank deposits, there is no government fund to reimburse you. Recovery would depend on the bankruptcy process and how much of the company's assets remain. The FTX collapse showed that recovery can take years and may be incomplete.