Is Coinbase Safe for Beginners? Everything You Need to Know in 2025

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Is Coinbase safe to use in 2025? Discover Coinbase’s security features, how it protects your crypto, and why it’s trusted worldwide. Start safely today!

Is Coinbase safe? In 2023 alone, over $3.8 billion was lost to crypto theft. So as a beginner who wants to use Coinbase, it’s natural to wonder whether your crypto will be secure with them. In 2025, Coinbase remains one of the most popular options—but is it secure enough for your hard-earned money? In this article, I’ll break down Coinbase’s security features, track record, and additional tips to keep your funds safe so you can decide with confidence.


What Is Coinbase?

Founded in 2012 by Brian Armstrong, who also serves as its CEO, Coinbase is a leading cryptocurrency exchange headquartered in San Francisco, California. The platform has become a cornerstone of the cryptoeconomy, offering users a trusted space to buy, sell, and manage digital assets.

Coinbase is where millions of people worldwide discover and begin their journey into crypto. With a strong global presence, Coinbase partners with 245,000 ecosystem members across over 100 countries, empowering individuals and businesses to invest, spend, save, earn, and use cryptocurrency easily and securely.

The scale of Coinbase’s operations speaks volumes about its credibility. With over $185 billion in quarterly trading volume, $273 billion in safeguarded assets, and a workforce of 3,600+ employees, Coinbase stands as one of the most robust players in the crypto space. Its commitment to compliance and innovation makes it a trusted choice for users globally.

Now that you understand Coinbase, let’s see why crypto traders consider it one of the safest platforms for storing and trading cryptocurrency.


Is Coinbase Safe? Security Features

Yes! When it comes to securing your cryptocurrency, Coinbase has built a strong reputation as one of the safest exchanges in the world. Their first line of defense is crime insurance, which protects a portion of the digital assets stored across their systems from theft due to cybersecurity breaches. While this is a great safety net, it’s important to know the limits: this insurance doesn’t cover losses from unauthorized access to your account caused by stolen credentials. This is why protecting your login information is just as important as Coinbase’s own security measures.

A big part of Coinbase’s security is how they store your funds. The platform stores most cryptocurrencies in cold storage, keeping them offline and completely out of reach from hackers. Only a small portion sits in hot wallets—the online portion required for active trading and transfers. Multiple layers of encryption and protection heavily guard these hot wallets.

To access your account securely, Coinbase strongly encourages the use of two-factor authentication (2FA). By linking your account to an authenticator app or receiving codes via SMS, 2FA adds an extra layer of security. If someone tries to log in without your permission, they won’t get far without that second step. I’ve personally relied on this feature, and it gives me peace of mind knowing that even if my password were compromised, my account remains secure.

Finally, Coinbase’s commitment to security goes beyond technology. They conduct regular security audits and adhere to strict compliance regulations. These measures aren’t just about following rules—they’re about earning your trust by staying ahead of potential threats.

All of these work together to make Coinbase a secure choice for storing crypto. But no system is perfect, and that’s why the next layer of security—your personal habits—plays a critical role.


How Coinbase Protects Your Cash

Coinbase doesn’t just focus on crypto security; they also take extra care to protect your cash balances. For U.S. customers, Coinbase stores your cash in custodial accounts at insured financial institutions or invests it in safe, highly liquid U.S. assets. Treasuries or USD-denominated money market funds. This ensures that your money is safeguarded even if something were to happen to Coinbase as a company.

In fact, cash stored in these custodial accounts is eligible for pass-through FDIC insurance, up to $250,000 per individual, just like a traditional bank account. This coverage protects your funds in the event that one of the banks holding Coinbase’s accounts fails. However, this insurance only applies to cash—FDIC or similar protections do not cover your cryptocurrency holdings.

It’s worth mentioning that Coinbase follows strict state money transmitter laws, which require the company to keep customer funds separate from company funds. This separation ensures your cash stays dedicated to your transactions rather than funding Coinbase’s operating expenses or other purposes, building additional trust with users.

Read also! Is Coinbase Wallet Safe or Risky?


Limitations of Exchange-Based Storage

While Coinbase has built a secure and reliable platform, it’s crucial to understand that no exchange is completely immune to risk. Even the most robust systems can be vulnerable to insider threats, large-scale hacks, or unforeseen events. Though Coinbase’s crime insurance is a strong safeguard, there’s always a chance that total losses in a catastrophic event could exceed insurance coverage.

Another key limitation lies in the shared responsibility model. Coinbase secures their platform, but your account security depends on you as well. If you use a weak password or fall for phishing scams, even the best exchange security won’t protect your funds. This is why practices like enabling two-factor authentication and staying vigilant online are so important.

Because of these risks, it’s wise to think of Coinbase—or any exchange—as a place for active trading or short-term storage. For long-term holdings, a hardware wallet is a much safer option. By taking control of your private keys and storing them offline, you can eliminate the risk of exchange vulnerabilities altogether. We’ll explore this approach further in the next section.


Why You Should Consider a Hardware Wallet

While Coinbase wallet is one of the safest platforms for storing crypto, the ultimate control and security of your digital assets come from owning your private keys—and that’s where hardware wallets shine. A hardware wallet is a physical device that stores your cryptocurrency offline, completely isolated from potential online threats. By transferring your funds from an exchange to a hardware wallet, you take full ownership, reducing the risk of loss from hacking or exchange-related issues.

One of the key benefits of a hardware wallet is that it’s immune to cyberattacks, phishing attempts, and other online vulnerabilities. Unlike keeping your crypto on an exchange, where private keys are managed on your behalf, a hardware wallet ensures that only you have access to your keys. This means no one—not even Coinbase—can access your funds without your explicit authorization.

If you’re serious about crypto security, consider trusted options like the Ledger Flex or the Trezor Safe 3. Both are highly regarded for their advanced security features, ease of use, and compatibility with a wide range of cryptocurrencies. These wallets provide an intuitive way to manage your crypto while keeping it safe from online risks.

For a detailed comparison of the best hardware wallets available, we’ve reviewed the 10 best crypto hardware wallets in the U.S.. This guide will help you find the perfect fit based on your needs and budget. Make sure to check it out to take the next step toward securing your investments.


How to Secure Your Coinbase Account

Taking a few extra steps to secure your Coinbase account can make all the difference in protecting your funds. Here’s how to do it:

  1. Set Up a Strong Password
    Use a unique and complex password that’s not used for any other account. Consider using a reputable password manager to generate and store it securely.
  2. Enable Two-Factor Authentication (2FA)
    Activate 2FA through an authenticator app like Google Authenticator or Authy. This adds a second layer of security to your account, making it harder for anyone to log in without your consent.
  3. Be Wary of Phishing Scams
    Never click on suspicious links or provide your login credentials in response to unsolicited emails or messages claiming to be from Coinbase. Always verify URLs before entering sensitive information.
  4. Review Your Account Activity Regularly
    Check for any unfamiliar login attempts or activity. Coinbase provides tools to monitor your account and disable access from unrecognized devices.
  5. Transfer Long-Term Holdings to a Hardware Wallet
    For funds you plan to hold for a long time, transfer them to a hardware wallet like the Ledger Flex or Trezor Safe 3. This keeps your crypto offline and out of reach of potential online threats.

By following these steps, you can significantly reduce your risk and make the most of Coinbase’s built-in security features.


Is Coinbase Safe: Conclusion

Coinbase has proven itself as one of the most secure platforms for buying, selling, and storing cryptocurrency. Its combination of crime insurance, cold storage practices, and cash protection measures makes it a solid choice for beginners and experienced users alike. However, no system is entirely foolproof, and taking personal responsibility for your account’s security is essential.

For maximum protection, pairing Coinbase’s robust security with a hardware wallet gives you the best of both worlds. Use Coinbase for trading and liquidity needs, but move your long-term holdings offline to a device like the Ledger Stax or Trezor Safe 5.


FAQs

1. Is Coinbase Safe?

Yes, Coinbase is one of the safest cryptocurrency exchanges. It uses a combination of cold storage for most funds, two-factor authentication, strong encryption, and regular security audits to protect your assets. However, no exchange is completely risk-free, so users should take extra precautions, like using a hardware wallet for long-term storage.

2. Is Coinbase Legit?

Yes, Coinbase is a legitimate and trusted cryptocurrency exchange. It is a publicly traded company on the NASDAQ, adheres to strict regulatory standards, and has millions of users worldwide.

3. Is Coinbase FDIC-Insured?

Cash balances held in Coinbase accounts by U.S. customers are eligible for FDIC pass-through insurance, up to $250,000 per individual. However, this coverage applies only to cash, not cryptocurrency holdings.

4. What Happens if Coinbase Gets Hacked?

In the event of a hack, Coinbase carries crime insurance to cover a portion of the digital assets lost due to cybersecurity breaches. However, this insurance does not cover losses caused by unauthorized access to your account resulting from user error, such as weak passwords or phishing attacks.

5. Does Coinbase Protect My Crypto?

Coinbase protects your cryptocurrency by storing 98% of funds in offline cold storage and using advanced security measures for the remaining online assets. However, crypto is not insured by FDIC or SIPC, so the ultimate safety of your holdings also depends on personal security practices.

6. Can Coinbase Freeze My Account?

Yes, Coinbase can freeze accounts if suspicious activity is detected or if required by legal or regulatory authorities. This is a common practice for compliance and security purposes.

7. Should I Keep All My Crypto on Coinbase?

It’s not recommended to store all your crypto on any exchange, including Coinbase. While it’s secure for trading and short-term storage, using a hardware wallet like Ledger Flex or Trezor Safe 3 is the best option for long-term storage.

8. How Can I Improve My Coinbase Account Security?

To enhance your Coinbase security:

  • Use a strong, unique password.
  • Enable two-factor authentication (2FA).
  • Be cautious of phishing scams.
  • Regularly monitor your account activity.
  • Consider transferring long-term holdings to a hardware wallet for offline security.