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Before sending cryptocurrency to a new perpetuals exchange, verify the legal entity and its authorization in your jurisdiction, understand who controls and may reuse your assets, test whether the withdrawal route works, and calculate the complete cost of the trade. Then examine proof-of-reserves, security controls, liquidity, liquidation rules, and outage procedures. These checks reduce uncertainty but cannot guarantee that a centralized exchange will remain solvent or available.
- Identify the contracting company, regulator, permitted activity, and governing law.
- Read custody, segregation, reuse, insolvency, withdrawal, and suspension terms.
- Treat proof-of-reserves as a limited, dated disclosure rather than an audit or solvency guarantee.
- Compare funding, spreads, slippage, trading fees, transfers, and custody charges on your actual trade path.
- Review perpetual-contract mechanics, liquidation, insurance-fund, and outage rules.
- Use a small test transfer only after the terms are clear; never test an unfamiliar exchange with a material balance.
Why a new perpetuals exchange needs more scrutiny
A perpetual contract gives you leveraged exposure without an expiry date, while a centralized exchange controls the account, matching engine, collateral records, and withdrawal process. You therefore face two different risks at once: the market can move against your position, and the platform can restrict access to assets or fail as a business. A low advertised fee or attractive leverage limit addresses only a small part of that risk.
The right question is not whether an exchange appears popular. It is whether you can identify the counterparty, establish what legal and property rights you receive, understand how the contract behaves during stress, and price the complete route from deposit to trade to withdrawal. Keep dated notes and copies of the terms because fees, supported markets, entities, and permissions can change.
1. Identify the legal entity and regulatory perimeter
Find the company you are actually contracting with
Start in the terms of service, privacy notice, custody agreement, and risk disclosures. Record the exact legal name, incorporation jurisdiction, registered address, and any separate company identified as custodian, broker, settlement agent, or technology provider. A brand, mobile application, or domain is not necessarily the entity holding your assets or entering your contract.
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Save a PDF or screenshot of the relevant terms and write down the date checked. Note the governing law, venue for disputes, arbitration clauses, account-closure rights, suspension powers, and insolvency language. If the exchange gives different terms to residents of different countries, make sure you are reading the version that applies to your account.
Verify the permission for the specific service
Search the regulator or public register that covers your location and the activity offered. Confirm that the register entry names the same legal entity and describes the relevant service, rather than a different company or a narrower permission. A corporate filing or money-laundering registration does not by itself authorize derivatives, custody, brokerage, or every activity shown in an app.
U.S. Securities and Exchange Commission investor guidance notes that protections depend on the regulated activity and warns that a crypto entity may not be registered for securities activities. That warning does not determine the status of an unnamed exchange, but it illustrates why a registration label must be matched to the exact service and customer location.
Check whether perpetuals are available to you legally
Perpetual derivatives may be restricted by country, client category, leverage limit, margin requirement, or product type. Confirm the rules that apply to your residence before opening an account. The available evidence here does not resolve any particular country’s derivatives law or any named exchange’s permission, so those questions remain jurisdiction-specific checks you must perform with current official records or qualified legal advice.
2. Understand custody and what happens if the platform fails
Determine who controls the keys and records your balance
Ask whether the exchange holds coins directly, uses a custodian or sub-custodian, or combines both arrangements. Identify who controls the private keys, how customer balances are recorded, and whether assets are held in identifiable wallets or pooled accounts. A dashboard balance is an accounting entry; it does not, by itself, prove that you own segregated property or have priority over other creditors.
Look for a written custody policy that explains the service, security systems, fees, applicable law, and responsibilities of each provider. For crypto-asset service providers within MiCA’s scope, Article 75 refers to a custody policy, a client-position register, and custody-agreement details. Those are jurisdiction-specific requirements, not a universal rule for every exchange worldwide.
Read segregation, lending, and reuse provisions
Search the terms for words such as lend, pledge, rehypothecate, reuse, stake, omnibus, collateral, title transfer, and right of set-off. Determine whether the operator can use customer assets for its own financing, lend them to affiliates, post them as collateral, or net one customer’s claim against another. If the terms are silent or vague, treat that as an unresolved risk rather than assuming the most favorable interpretation.
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Find the stated treatment of customer assets if the operator, custodian, or an affiliate becomes insolvent. The answer should identify whether customers have a proprietary claim, an unsecured contractual claim, or another status, and how recovery would be handled. Proof that wallets contain assets does not answer the liability, segregation, or creditor-priority questions.
Map the withdrawal process before depositing
Read withdrawal limits, daily and per-transaction caps, review holds, address-whitelisting delays, supported networks, identity checks, and suspension rights. Confirm the exact asset and network you would use, including whether a token has several similarly named networks. Check how an address change is authenticated and how long a new address remains locked.
Do not infer that a successful deposit proves withdrawals will be processed under stress. A platform can have an operational wallet and still delay, batch, limit, or suspend withdrawals under its terms. Keep an alternative route for moving funds and avoid depositing more than you can tolerate having inaccessible while a review is pending.
3. Interpret proof-of-reserves and other financial evidence
Proof-of-reserves is a disclosure about assets observed under a stated method and date. It is not automatically a financial-statement audit, a guarantee of solvency, or evidence that every customer liability can be paid. The SEC’s Investor.gov alert cautions: “In sum, investors should exercise extreme caution when relying on proof of reserves to conclude that a crypto asset entity has sufficient reserve assets to meet customer liabilities.”
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Record what the report actually covers
For each report, capture the report date, assets and wallet addresses included, liabilities included or excluded, valuation method, provider’s qualifications, independence, assurance level, and whether the work is repeated. Check whether customers can verify that their balance was included and whether the liability population is complete. A cryptographic inclusion proof can show that one balance was included in a set; it cannot establish that undisclosed obligations do not exist.
| Question | What a report may show | What it does not establish by itself |
|---|---|---|
| Asset ownership | Control or observation of specified wallets or accounts on a stated date | Unrestricted ownership, absence of pledges, or control outside the snapshot |
| Customer balances | Inclusion of balances under the provider’s chosen method | That all liabilities, contingent claims, loans, or affiliate obligations are included |
| Timing | A point-in-time picture | What happened before or after the measurement, including transfers between snapshots |
| Assurance | Procedures and confidence level described by the issuing provider | The scope and assurance of a full financial-statement audit unless one was actually performed |
| Recovery | Information about assets held | Customer priority, segregation, or the amount recoverable in insolvency |
Look for audited statements without overstating them
If audited financial statements are published, read the reporting period, auditor’s opinion, entities included, and exclusions. An audit of a parent company or a narrow subsidiary may not cover the exchange, custodians, customer liabilities, or digital-asset controls you care about. Use the stated scope and opinion, not the presence of the word audited, to judge its relevance.
4. Examine security and operational resilience
Prefer specific, dated controls to badges
Find the exchange’s description of multifactor authentication, passkeys or hardware-key support, withdrawal approvals, address whitelists, role separation, cold-storage practices, incident response, and business-continuity arrangements. A broad claim such as bank-grade security is not evidence of how an individual withdrawal or compromised account is handled.
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Check how the platform reports maintenance, halted markets, delayed settlements, liquidations, and security incidents. Search regulator notices and independent disclosures for the exact legal entity, not merely a similarly named brand. No exchange-specific security audit, incident record, or uptime history is established for an unnamed new platform here, so do not treat those items as already assessed.
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After reading the terms, create the smallest practical account and verify login recovery, multifactor enrollment, deposit crediting, and a withdrawal to an address you control. Use a low-value amount that would not create financial hardship if delayed. Confirm the asset, network, memo or tag requirement, fee, and resulting on-chain transaction. Never send a material balance merely to test an unfamiliar service.
5. Evaluate the perpetuals product, not just the interface
Compare contract and collateral specifications
For every contract you might trade, record the underlying index, mark-price formula, settlement asset, maximum leverage, position limits, minimum order size, and whether collateral can be shared across positions. Check whether the contract is margined in a volatile token or a stable-value asset, and how conversions are priced.
| Mechanic | Questions to answer before trading |
|---|---|
| Funding | How often is funding calculated and paid, what index or premium drives it, and can the rate be capped or changed? |
| Margin | What are initial and maintenance margins, isolated versus cross-margin rules, and collateral haircuts? |
| Liquidation | What price triggers liquidation, are positions partially liquidated, and what fees or penalties apply? |
| Insurance and deleveraging | How is an insurance fund financed, when is auto-deleveraging used, and how are affected accounts ranked? |
| Outages and extreme moves | Can trading, oracle updates, funding, or withdrawals be paused, and how are orders and liquidations handled afterward? |
| Settlement | What happens at contract delisting, index disruption, chain congestion, or an unsupported collateral event? |
Read the operating and market rules
Find procedures for adding or removing assets, changing contract parameters, cancelling orders, halting markets, settling positions, and resolving price or oracle disputes. MiCA Article 76 describes transparent operating rules, fair and non-discriminatory fees, and procedures for orderly trading and settlement for covered EU trading platforms. Its existence does not prove that a particular exchange complies, so compare the exchange’s published rules with the applicable law and register information.
Measure liquidity at your expected size
Headline volume is not executable liquidity. Inspect the order book, quoted spread, depth at the price levels relevant to your position, and the slippage for both entry and exit. Consider how liquidity changes during funding timestamps, major market moves, and regional trading hours. Current depth, funding history, liquidation performance, and market-quality data are exchange- and time-specific; leave them open until you can observe or obtain current evidence.
6. Calculate the complete cost of your intended trade
Model the exact route you expect to use, including opening and closing the position. A low maker fee can be overwhelmed by spread, slippage, funding, conversion, or withdrawal charges.
| Cost category | What to include |
|---|---|
| Trading fees | Maker and taker rates for your account tier, contract, order type, and expected volume |
| Execution | Bid-ask spread, price impact, partial fills, and slippage on entry and exit |
| Funding | Expected payments or receipts for the holding period, including the payment schedule and rate limits |
| Conversion | Charges and price impact when converting fiat, stablecoins, or collateral assets |
| Transfers | Deposit fees, withdrawal fees, network charges, minimums, and any intermediary deductions |
| Custody and account | Asset-management, inactivity, settlement, borrowing, or other account charges disclosed in the terms |
Write the calculation in a worksheet: estimated entry cost plus fees, expected funding for the planned holding time, estimated exit cost plus fees, and the cost of moving the remaining assets off-platform. Run a conservative case with wider spread, worse slippage, and a higher funding rate. SEC custody guidance specifically identifies transaction and asset-transfer fees as costs customers should ask about. MiCA Article 76 addresses transparent fee structures for covered platforms.
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7. Decide whether self-custody changes your plan
A hardware wallet or other self-custody wallet matters only for assets you withdraw. Once withdrawn, you control the private keys and also assume responsibility for backup, recovery, device security, and transaction mistakes. SEC guidance makes this division clear: self-custody transfers key-security responsibility to the individual.
A wallet cannot protect collateral, profits, or other assets left on the exchange. It also cannot prevent a leveraged position from being liquidated, and withdrawing collateral may reduce the margin supporting an open trade. Plan the withdrawal after closing or safely reducing positions, account for network fees and confirmation time, and verify the destination address and network on the device itself.
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When evaluating more than one platform, use the same questions, evidence date, position size, collateral, and withdrawal route. Do not compress the result into a single safe-exchange score unless you publish the scoring method and evidence behind every component.
| Axis | Evidence to record |
|---|---|
| Legal status | Contracting entity, your jurisdiction, permitted activity, and current regulator-register entry |
| Customer-asset rights | Key control, segregation, lending or reuse, custodian chain, and insolvency treatment |
| Financial transparency | Report date and scope, assets and liabilities, assurance provider, and audit status |
| Perpetual mechanics | Collateral, leverage, funding, margin, liquidation, insurance, and outage rules |
| Market quality | Spread and depth at your order size, execution evidence, oracle design, and settlement process |
| Security and continuity | Authentication, withdrawal controls, incident disclosures, recovery, and business-continuity evidence |
| Access to funds | Supported withdrawal networks, limits, delays, review holds, fees, and suspension policy |
| Total cost | Trading fees, spread, slippage, funding, conversion, transfer, network, and custody charges |
A platform can be inexpensive while offering weak custody transparency. A license in one jurisdiction does not establish protections in another. Keep unresolved items visible instead of awarding credit for information the exchange has not supplied.
9. Use decision gates before the first material deposit
Proceed only when the critical facts are documented
- You can name the contracting entity and match it to a current register entry or a clearly documented legal basis for the service in your location.
- The custody arrangement, key control, asset-use rights, segregation, insolvency treatment, and withdrawal process are understandable in writing.
- You have read the contract, funding, margin, liquidation, outage, and settlement rules for the exact perpetuals you plan to trade.
- You have observed or independently verified liquidity and calculated total costs for your actual position size and holding period.
- You have completed a small deposit and withdrawal without unexplained delays, network ambiguity, or unexpected charges.
Pause or reject when material uncertainty remains
- The legal entity is hidden, changes across documents, or cannot be matched to the service offered.
- The platform refuses to explain whether it can lend, pledge, or reuse customer assets.
- Proof-of-reserves is undated, omits liabilities, lacks methodology, or is presented as proof of solvency.
- Withdrawal limits, review holds, fees, or supported networks are unclear or subject to unrestricted discretion.
- Liquidation, oracle, insurance-fund, or outage rules are missing for the contracts you would trade.
- Liquidity appears dependent on headline volume, while order-book depth and exit costs are unavailable.
10. Keep a dated due-diligence record
- Save the terms of service, custody policy, fee schedule, perpetual-contract specifications, and withdrawal instructions.
- Record the legal entity, register search, jurisdiction, and date of each verification.
- Store the proof-of-reserves report, methodology, report date, and any published financial statements.
- Write down the planned asset, network, position size, leverage, holding period, funding assumptions, and conservative slippage case.
- Perform and document a low-value deposit and withdrawal, including the transaction hash, elapsed time, and final fee.
- Set a review date because permissions, products, fees, custodians, and operating policies can change.
What this process can and cannot tell you
Due diligence can reveal who you are dealing with, what the contract says, how the product is designed, and which facts remain unverified. It cannot guarantee continuous solvency, uninterrupted withdrawals, accurate disclosures, fair liquidation during every market event, or recovery after an operator failure. Regulatory status is location- and activity-specific, and exchange conditions are time-sensitive.
The practical outcome is a documented risk decision: deposit only an amount consistent with the remaining custody, market, legal, and operational uncertainties, and keep the ability to withdraw or stop trading if new evidence changes the assessment.
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