Whether you are brand new to crypto trading or have been investing for a while, you have undoubtedly experienced the hurdles of crypto portfolio management.
Keeping tabs on a broad portfolio of digital assets can be challenging, especially if they are stored across multiple hot or cold wallets. This reality holds true even if you use a syndicated crypto asset-management solution like one of these top portfolio tools.
Fortunately, using a crypto broker can minimize these admin headaches and improve your crypto investing experience.
If you’re not sure how to find a broker or whether you even need one, this article covers all of the details: what a crypto broker does, what to look for when searching for a brokerage partner and how to set up a crypto trading account will all be explained.
Do I Need a Crypto Broker?
To be transparent: no, you do not actually need a crypto broker. Millions of people buy and sell cryptocurrencies independently every day. They manage their various crypto wallets, track their portfolios and perform transactions without a broker.
However, just because you can trade crypto without a broker, it does not necessarily mean you should.
Working with a broker offers many benefits. First off, brokers can steer you clear of fraudulent activity in the space, such as pump-and-dump schemes.
An experienced broker will also research and analyze new and emerging coins, so you don't have to do all the research yourself. If you are interested in investing in a new coin, your broker will review the project’s potential pros and cons. Additionally, a cryptocurrency broker can assist with crypto asset management.
What Does a Crypto Broker Do?
Crypto brokers act as your financial intermediary, buying or selling cryptocurrency on your behalf. However, trading is just one element of the wider service crypto brokers charge a fee for. The fee structure can vary greatly, which is why it is important to choose your broker carefully. More on that in the next section.
Beyond executing trades, brokers also provide guidance on the viability of investments. Ultimately, it is your money, and you get to choose how to invest it. However, a great broker can help you focus your investing strategy to achieve your financial goals.
How Much Does a Crypto Broker Charge?
Some brokerages charge you a fee for every single thing they do. They will tack on fees for deposits, withdrawals, spreads and almost any other action you take on your account. They may also have trade obligations in their service agreement as well as charge sign-up fees to create your account.
For instance, you might be required to execute a minimum number of trades per month in order to avoid incurring additional fees. Or, you may be required to reach a minimum trade volume.
Let’s say that your brokerage requires you to trade at least $500 of cryptocurrency per month. You could meet this requirement by conducting one $500 transaction or a combination of smaller transactions, so long as you meet or exceed the volume threshold.
As you might imagine, these fees and their inflexibility can quickly add up and eat into your profits.
However, you can find brokerages with simple fee structures that are pay-as-you-trade. In short, you only pay fees to trade and for nothing else. As a result, additional services such as portfolio assembly and asset storage are free, so you can lean on them at your leisure regardless of your trading activity.
What's the Difference Between a Crypto Exchange and a Crypto Broker?
A crypto exchange is a platform that allows you to trade with other investors, acting as an intermediary that facilitates transactions between you and the other party. Crypto exchanges often charge minimal fees, but the amount of protection they provide buyers and sellers varies greatly.
For instance, a centralized exchange can offer more protection and support to traders. However, they’ll charge a higher rate for acting as the intermediary and offering these protections. On the other hand, a decentralized exchange strictly provides a platform for trading crypto and little else. While these decentralized exchanges offer a high degree of anonymity, they don’t provide any assistance or support through customer service, so there’s little to no protection against errors, fraud or other crimes you may be fall victim to.
Conversely, crypto brokerages are very hands-on. While their fee can be higher than that of exchanges, trading with a brokerage can be the safer option. Your broker is proactively working to protect your assets and has a shared interest in your financial success.
How Do You Set Up A Crypto Brokerage Account?
You will need to contact a brokerage to set up a crypto brokerage account. To do so, the brokerage will collect information about you and your portfolio so they can best support your investing goals. The process of raising an account is simple and will be handled and overseen by dedicated onboarding specialists to make for a seamless setup.
Once your account is up and running, you can contact your broker via phone to discuss the crypto market, and via email whenever you want to make a transaction. After your account is live, your broker will closely manage all of your crypto trades for you.
You Don’t Need A Crypto Broker, But You Should Probably Use One
As you can see, using a crypto broker has many advantages. Partnering with a broker is one of the best ways to safely join the crypto trading revolution without putting your financial assets at undue risk.
Should you like to learn more about the crypto scene, explore Benzinga’s other content, which tackles common topics like “What Is The Safest Crypto Wallet?” and “How To Buy Cryptocurrency?”
If you really want to get an edge on other traders, you should consider signing up for a Benzinga Pro account. Benzinga Pros gain access to exclusive news, market insights and more.
Frequently Asked Questions
How do I avoid paying fees on crypto?
To avoid paying fees on your crypto transactions, you must find an exchange platform that offers commission-free trading. You may also need to use strategic transaction methods, such as purchasing crypto with other cryptocurrencies instead of fiat money.
What is the best way to manage cryptocurrency?
Using a talented crypto brokerage is the best way to manage your cryptocurrency investments. These professionals will help you track your assets, monitor gains and make wise investment strategies.
How do I start crypto trading?
First, you will need to do plenty of research to identify which coins align with your financial goals. From there, partner with a broker and create an account on a reputable exchange. Then you’re set to start trading.