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1Repair Windows errors before they cause bigger problems2Fix the driver behind crashes, sound loss and screen glitches3Clear out junk files and repair common Windows errorsTo reduce the amount at risk if a crypto exchange fails, keep on the exchange only what you need for trading and consider moving longer-term holdings to self-custody only if you can protect and recover the private keys. Before choosing either approach, check the exchange’s legal entity, custody terms, withdrawal rules, and whether it can lend, pledge, or commingle customer assets. No arrangement removes every risk, and crypto held at a non-bank exchange is not protected by FDIC deposit insurance.
What can happen when an exchange fails?
A failure can mean more than a temporary outage. An exchange may suspend withdrawals, enter insolvency proceedings, or leave customers uncertain about whether they own particular assets or how much they may recover. The outcome depends on the specific legal entity, customer agreement, assets involved, and applicable law. Investor.gov describes these risks in its alert, “Exercise Caution with Crypto Asset Securities: Investor Alert.”
Do not assume that a balance shown in an app is equivalent to a deposit account at a bank. A customer’s practical access to crypto depends on the exchange’s custody arrangements and the legal treatment of customer claims if the provider becomes insolvent.
Choose a custody approach that matches your needs
Keeping assets with a provider can make trading convenient, while self-custody gives you direct control of the keys used to authorize transactions. The trade-off is not simply “exchange risk versus no risk”: each approach puts access, security, and recovery responsibilities in different hands.
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| Approach | What it changes | Main risks to assess |
|---|---|---|
| Exchange or custodian | The provider holds crypto or controls the means of access, subject to the actual custody arrangement and customer agreement. | Provider failure, suspended withdrawals, unclear insolvency treatment, and any lending, pledging, or commingling of customer assets. |
| Self-custody | You manage the private keys or recovery material needed to access and transfer the assets. | Loss, theft, damage, compromise, or a mistaken transfer can prevent recovery; key management and account recovery become your responsibility. |
A “self-custody” label alone does not establish who has practical control. UK Financial Conduct Authority guidance in PERG 18 says control depends on the actual means a firm has to bring about a transfer. Its regulatory classification guidance is UK-specific; check the provider’s actual arrangement rather than relying on a product label.
Check the exchange’s legal and custody terms
Identify the exact entity named in your customer agreement, not just the brand displayed in an app. Establish where that entity is based and which agreement governs your account. A platform may use different entities or terms for different services or customers, and cross-border custody can complicate insolvency questions. FINMA’s notice of 12 January 2026 highlights additional insolvency-law complications that may arise when assets are held abroad.
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- Segregation: Find out whether customer assets are kept separate from the provider’s own assets and what the agreement says happens in insolvency.
- Use of assets: Ask whether the provider may lend, pledge, or otherwise use customer crypto, or combine it with other assets. SEC staff’s “Crypto Asset Custody Basics for Retail Investors – Investor Bulletin” identifies these as matters customers should investigate.
- Control and custody: Ask who holds the keys, who can authorize a transfer, and whether another firm or custodian is involved.
- Withdrawals: Check applicable limits, processing rules, supported assets and networks, and withdrawal or transfer fees. Review what happens if withdrawals are paused.
- Recovery and charges: Understand the provider’s account-recovery process and any trading, custody, setup, transfer, or account-closing fees that apply to you.
Some regulatory safeguards are jurisdiction-specific. Under MiCA, Articles 70 and 75 set requirements for covered crypto-asset service providers, including safeguards for client assets and legal segregation of assets held in custody from the provider’s estate in the interest of clients, in accordance with applicable law. Those provisions are not universal protection for every exchange, service, customer, or asset. Check whether the provider and service fall within the relevant regime and what law governs your account.
Do not treat proof of reserves as proof of solvency
A proof-of-reserves report can provide limited evidence about assets at a particular point, but it may not disclose all liabilities or what happened between snapshots. SEC investor guidance cautions that proof-of-reserves is not subject to audit requirements comparable to a financial-statement audit. A reserves display by itself does not establish that a provider can meet all customer liabilities.
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- Proven security at scale: Over 9 years and millions of cards issued with no known remote hacks, while military‑grade EAL6+ security keeps your private keys locked inside the chip. Your cryptocurrencies stay strongly protected from online attackers.
- Tap once to manage your entire crypto wallet across 90 blockchains - no USB cables or Bluetooth, no batteries, no setup. Access 14,100+ coins & tokens, DeFi, NFTs, and staking instantly from your phone
- Smart backup: Use your second Tangem Wallet as your Backup keys with end‑to‑end encryption; no more papers, pictures. If one card is lost, the remaining can still restore full access, with an optional seed phrase available for advanced users.
- Engineered to last up to 25 years: Waterproof (IP69K), shockproof and tested for extreme temperatures from −25°C to 50°C. A durable cold wallet with long‑term protection and independently audited security.
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Read what the report covers, when it was prepared, and what it excludes. Do not use it as a substitute for checking the legal entity, custody terms, customer-asset treatment, and withdrawal rules.
Know what is and is not insured
FDIC deposit insurance applies to qualifying deposits at insured banks, not to crypto assets. The FDIC also says it does not insure against the failure of a non-bank crypto exchange, custodian, broker, or wallet provider. If a crypto company says customer fiat is held at a bank, check whether it is actually placed in an eligible deposit account and who the depositor is; that does not turn crypto holdings or the exchange itself into FDIC-insured property. The FDIC’s 28 July 2022 fact sheet explains the scope and exclusions.
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If you choose self-custody, prepare before transferring
Self-custody removes reliance on an exchange to authorize your transactions, but it transfers key security and recovery responsibilities to you. SEC staff guidance warns that a lost, stolen, damaged, or hacked wallet can result in permanent loss.
- Learn the wallet’s recovery process. Know how the private key or recovery material works and how you would regain access if a device is lost or damaged.
- Secure the recovery material. Never share private keys or seed phrases. Protect them from theft, loss, and unauthorized access, and be cautious of requests to reveal them.
- Protect online accounts. Use strong passwords and multifactor authentication where available, and verify transaction details before approving them.
- Verify a transfer before sending. Confirm the destination address, asset, network, and exchange withdrawal terms. A hardware wallet can help manage keys for assets you move to it; it does not protect crypto still held at an exchange or remove key-management, recovery, or user-error risks.
- Start only with a tolerable amount. If you decide to test a transfer, use an amount you could tolerate losing or sending incorrectly. This is a practical precaution, not a guarantee of safety.
Review the decision as circumstances change
Revisit where you hold assets when your balance, trading needs, provider terms, or applicable laws change. Recheck the precise entity and agreement rather than assuming that a provider’s previous terms, regulatory status, or custody practices still apply. For jurisdiction-specific protections, consult the relevant local regulator and the governing customer agreement.
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This is general educational information, not an individualized legal or financial assessment.
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