Is Coinbase Safe?

James HeadshotAuthor: James Page
Last Updated: September 2023

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The crypto industry and crypto trading, in general, are commonly characterized as volatile and precarious. One the one hand, prices of digital coins are fluctuating all the time, and on the other, online crypto platforms are major hackers’ targets.

This makes traders hesitant to get involved in the crypto market and risk losing their investment. What they need to realize is that crypto trading can be a very lucrative business too, as long as they keep their eyes wide open and find the right cryptocurrency exchange.

This time, our team has singled out Coinbase and did extensive research on their security methods.

What’s Coinbase?

Coinbase is an American cryptocurrency exchange launched in 2012 by two software engineers, Brian Armstrong and Fred Ehrsam. 

There are a number of reasons why Coinbase is a common entry point to the world of crypto. First of all, the platform is very user-friendly because it aims to make crypto trading less intimidating for the newbies and laypeople.

coinbase logo

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Next, Coinbase supports fiat to crypto trading and allows users to deposit fiat currencies. This means that if you haven’t bought any digital coins yet, you can do this directly on Coinbase. When it comes to buying and selling coins, you can choose between Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.

Coinbase has some of the most competitive fees in the industry. It features a range of trading tools, but since the idea is to keep the interface simple and straightforward, experienced traders are welcome to use their more advanced interface Coinbase Pro.

The rest of our guide puts into focus the level of security and safety measures provided by Coinbase. If you want to discover more details about the exchange’s features, you’re welcome to check out our in-depth Coinbase Review.

Platform Security

Coinbase has obtained Money Transmitter Licenses across most US states and it’s registered as a Money Services Business with FinCEN. It complies with the Bank Secrecy Act that requires the platform to verify user identities and keep the transaction records for 5 years. Plus, the company is authorized by the Financial Conduct Authority.

Every one of Coinbase’s employees has to pass a criminal background check before they’re hired. All of them are required to encrypt their hard drives, choose strong passwords, and take great care about the security of their accounts in general so as not to leak any sensitive data.

Similarly, when users create their accounts, Coinbase double-checks that they’re strong enough, hashes them using bcrypt, and then stores them in the database.

The confidential data (including wallets and private keys) is secured with AES-256 SSL encryption and insured by the FDIC (Federal Deposit Insurance Corporation) on top of that. The insurance applies to US residents, to a maximum of $250,000.

Another thing that sets Coinbase apart from other exchanges is its Digital Asset Framework that includes assessment criteria that have to be met before a new cryptocurrency enters the list of supported coins. This is why, even though Coinbase doesn’t offer many coins, the ones it does are to be trusted.

Account Security

Here’s what to do to leverage Coinbase’s options and secure your account even more.

Two-Factor Authentication

The first thing you should do once Coinbase has verified your account is to activate the two-factor authentication method, or simply 2FA. The 2FA adds a second layer of protection to your account, apart from the password you’ve chosen at the start.

This second layer of protection is usually linked to the user’s mobile phone and it’s called SMS authentication. Whenever you want to log into your account, Coinbase sends a verification code to your device.

Although convenient, this method is definitely not 100% secure. There are many reports of mobile malware and vulnerabilities, which is why Coinbase has added two more 2FA options.

One is using a mobile authenticator app such as Google Authenticator or Duo that generates Time-based One Time Password (TOTP). The other is purchasing a hardware device such as Yubico that generates a secret key for the user. These two options significantly lower the chances of having your account compromised by an outsider.

Whitelisting Withdrawal Addresses

Coinbase Pro users have the advantage of using the “Whitelisting” security feature accessible from the Address Book section. This feature allows them to authorize withdrawals only to certain pre-listed addresses.

You need to pass the 2FA to enable or disable this feature. Once you activate it and add the addresses, there’s a 48-hour hold period for any new address you want to add to the list. If your account tries to withdraw funds from your balance to an address that’s not on the Whitelisting list, the system will automatically block the transaction.

Coinbase Vault

Some traders like to spend the cryptocurrencies right away, others decide to hold onto them as a long term investment. If you belong to the second group, Coinbase invites you to use their Coinbase Vault.

The Vault is where you store all your funds. Whenever you want to make a withdrawal, the Vault requires a multi-email approval. You also get the option to cancel the withdrawal within the next 48 hours if you’ve changed your mind or realized the withdrawal was done by someone else.

You can set the Vault at any time, following just a few simple steps outlined in Coinbase’s guide.


Our research has shown that Coinbase is one of the safest crypto exchanges and we recommend using it for crypto trading regardless of whether you’re a beginner or an expert. However, leaving your funds online for a longer period of time is a risky thing to do, so if you’re “team hodler”, we suggest you make an investment into a hardware wallet instead.

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About The Author

James Headshot

James Page

Crypto Technical Writer

James is the main editor at Crypto Head. With a passion for finance and anything blockchain, cryptocurrency is right up his alley.

He’s responsible for most of the content on the site, trying his best to keep everything up to date and as informative as possible. You can also find James on LinkedIn.

Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.