The crypto space has its fair share of unpleasant surprises; sometimes bad things happen. We could list numerous hacks, errors, and attacks that have set mass crypto adoption back.
The most glaring example in recent times is the FTX exchange’s failure. FTX stood out as a major cryptocurrency exchange platform. Some of the world's biggest talents and their executives promoted the now-collapsed crypto exchange, attracting more users to crypto, centralized exchanges, and their custodial wallets.
However, a sudden increase in customer withdrawals, prompted by concerns about questionable financial practices, led to FTX facing bankruptcy. This disruption echoed through the volatile crypto market, resulting in significant losses totaling billions and causing the market valuation to drop below the $1 trillion mark.
More bad news was the irreversible disappearance of millions in customer deposits. This example alone raised the question of the security of centralized exchanges. This article gives good reasons to withdraw coins from exchanges and provides simple steps.
Why withdraw your cryptocurrency from exchanges?
Let's go over a few critical reasons for moving your funds out of custodial exchanges.
1. Security concerns
Keeping your coins and tokens on exchanges exposes them to potential security vulnerabilities. Hackers have often targeted centralized exchanges to drain users' funds.
No centralized exchange is truly safe, and no one can fully guarantee that your funds are safe. Coinbase— the most popular crypto exchange in the United States— said its users' crypto assets could become company property if it went bankrupt.
If something detrimental — cyberattack, mismanagement, natural disaster — happens to Coinbase, getting your crypto back will be virtually impossible. Withdrawing your assets ensures you can keep them in a more secure environment, typically in a cold wallet where you have control over the keys.
2. Protecting against exchange issues
Like any online platform, cryptocurrency exchanges can face technical problems, downtime, or other operational issues. If you need to access your funds urgently and the exchange is experiencing problems, you might miss out on favorable trades or lose life-changing amounts of money.
This is a common issue during dynamic market price movements — users often complain their wallet account pages are not loading or their transactions are not being processed. When your digital assets are under your control, you can bypass any exchange-related issues, ensuring immediate access to your funds.
3. Marketplace control
During high market volatility, some exchanges may restrict withdrawals or trading activities. Headlines such as Binance halting BTC withdrawals and Crypto exchange BitForex halting withdrawals and stopping trading have become commonplace on our social media news feeds.
By holding your coins in a hardware wallet, you retain control over your assets, enabling you to respond promptly to market changes without being subject to any restrictions imposed by the crypto exchange.
4. Regulatory Compliance
Cryptocurrency regulations are evolving, and they impact how exchanges operate. Most exchanges are forced to adapt to comply with new regulations, potentially causing disruptions to their services.
After the Russia-Ukraine conflict, Binance and other exchanges denied services to Russian users in compliance with new EU sanctions. Binance US also stopped operations after an SEC lawsuit and resolution.
Avoid becoming a victim of new crypto regulations. Ensure that your funds remain unaffected by any adjustments made by the exchange to comply with emerging legal requirements.
Looking beyond custodial exchanges
Custodial exchanges are easy to use, but you won't have complete control over your coins and tokens. Cold wallets are a better way to keep your investments safe without giving up control.
Consider using a hardware wallet like Tangem Wallet for even more security. With Tangem, you can keep your coins in cold storage, buy, sell, and swap them.
How to withdraw your coins from a crypto exchange
Keeping your digital money safe is very important in the world of cryptocurrency. With the Tangem Wallet, you can take care of your coins and keep them safe in cold storage. Here's a guide to help you move your coins from exchanges to the safe place of your Tangem Wallet.
Finding your wallet deposit address in the Tangem app
Before you move your crypto, you must know where to send it. The Tangem Wallet app makes finding your wallet address easy:
- Open the Tangem mobile app and pick the cryptocurrency you want to get (like USDT on the Ethereum network). If you don't see the token, add it by tapping Manage tokens.
- On the token's page, tap Receive.
- Copy the wallet address.
The Tangem Wallet app's intuitive design helps you manage your cryptocurrencies and keep track of your portfolio address. To learn more about adding and receiving cryptocurrencies, visit How to Add Cryptocurrency to the Tangem Wallet App and How to Get Your Wallet Address in the Tangem Wallet App.
Withdrawing your crypto to cold storage
Moving your cryptocurrency to cold storage like the Tangem Wallet is simple:
- Log in to your exchange account and go to the withdrawals section, which might be under transactions, balances, or wallet.
- Select the cryptocurrency you want to withdraw, and choose the right network. For example, withdraw the USDT ERC20 token to the ERC20 address you copied from Tangem).
- Paste your Tangem Wallet address or scan the QR code.
- Confirm the transaction and complete any required authentication.
Each exchange has its own withdrawal procedure, so looking up their instructions is a good idea. For step-by-step instructions on getting cryptocurrency with the Tangem Wallet, see How to Receive Cryptocurrency with Tangem Wallet.
Cryptocurrency: it's meant to be yours, so keep it that way
Crypto gives you an extraordinary chance to own your money without relying on others. But many people give up this freedom, trusting their money to exchanges that say they'll keep it safe—a promise that history has shown can be broken.
You lose most of the control when you leave your coins on an exchange. Hardware wallets are more than just a choice — they're a way to declare your independence in today’s world.
FAQ: Why withdraw your digital assets from exchanges
Why should I withdraw my coins from exchanges?
Withdrawing your assets from exchanges is crucial for enhanced security, protection against exchange issues, marketplace control during high volatility, and ensuring compliance with evolving regulations. It minimizes the risk of unauthorized access, technical glitches, and potential disruptions.
How does withdrawing from CEXs enhance security?
By moving your assets from exchanges, you regain control and store your assets in a cold wallet, reducing vulnerability to unauthorized access and enhancing overall security.
How do I withdraw my coins from an exchange?
To withdraw your coins, log into your exchange account, navigate to the withdrawal section, choose the cryptocurrency you want to withdraw, enter your Tangem Wallet address, confirm the transaction, and monitor its progress until it is completed in your wallet.
Is there a risk during the withdrawal process?
While withdrawal processes are generally secure, ensuring accuracy in providing the right wallet address on the right network is crucial to avoiding issues. Remember to do your research on your exchange’s withdrawal procedure.