OPINION | Crypto & Cybersecurity: What Exchanges, Investors, Regulators Should Be Responsible For

Crypto security is a shared responsibility. Explore how exchanges, investors and regulators can prevent attacks, protect digital assets and strengthen trust in the crypto ecosystem.

Crypto security requires exchanges, investors and regulators to work together against evolving threats and theft.

Source : cryptocurrency market Bitcoin reaches the highest price

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Key points generated by AI, verified by newsroom

• Securing crypto involves shared responsibility across all stakeholders.
• Exchanges must safeguard customer assets using strong internal controls.
• Investors must protect credentials, verifying all transaction details.
• Regulators set minimum standards, enhancing post-incident coordination.

Crypto security is often discussed as if one party is responsible. Exchanges are expected to secure customer assets, investors are told to protect their accounts, and regulators are expected to set the rules. The reality is more complicated. Each has a different responsibility, and many of today's biggest security incidents happen in the gaps between them.

With today’s access to technology, attackers increasingly target people and processes rather than trying to break blockchain technology itself. Compromised signing systems, phishing, insider access, fake recruiters, fraudulent support accounts, and even physical attacks are becoming bigger concerns.

The scale of the problem makes this difficult to ignore, with Chainalysis estimating that around $3.4 billion worth of crypto was stolen in 2025. In 2026, different trackers have reported significantly different numbers, but they point to the same trend: losses remain substantial and are heavily concentrated in a small number of large incidents.

As investors, a common question that comes up is, “Who is responsible for securing crypto assets?”

Exchanges: Security Has To Go Beyond Custody

For exchanges, the first responsibility is to protect customer assets. That means strong key management, well-designed hot and cold wallet systems, secure transaction approval processes, and strict controls around access. 

Exchanges need to invest in the internal and customer side of security. Features such as withdrawal address whitelisting, withdrawal delays, anti-phishing codes, and warnings for suspicious or similar addresses can prevent users from making costly mistakes.

While Proof of reserves can demonstrate that an exchange holds customer assets, it does not by itself demonstrate that the systems protecting those assets are secure. The industry needs both, proof that assets exist and proof that controls are working.

Most importantly, security should be treated as an ongoing process rather than an annual certification exercise. No platform can promise that it will never face an attack. What matters is how well it can prevent, detect, contain, and respond when something goes wrong.

Investors: Security Is Also A Personal Responsibility

Investors have an equally important role, particularly when they control their own wallets and credentials. The basic rules include never sharing a seed phrase or private key, using strong authentication, verifying the full wallet address before transferring funds, and being extremely cautious about unsolicited messages.

The threat is increasingly built around urgency and trust. A message appearing to come from customer support, a recruiter, an investment adviser, or even someone familiar is not necessarily genuine. AI-generated voices, images, and messages are making impersonation harder to detect.

Investors also need to think about concentration risk. Keeping everything on one platform or in one wallet can increase the impact of a single security failure. Understanding how an exchange's insurance or reserve fund works is equally important. Investors should be aware of what is covered, what is not, and what happens in the event of an incident.

Regulators: Build The Minimum Safety Standards

Regulators have a different job than the ones from exchanges or investors. They cannot prevent every attack, but they can establish the minimum standards that platforms must meet. This includes requirements around custody, segregation of customer assets, cybersecurity audits, reporting, and incident response. India's move towards mandatory cybersecurity audits for registered virtual digital asset service providers is an important step because it recognises that AML and KYC compliance alone do not guarantee technical security.

Regulators also have an important role to play in strengthening the response after an incident. Faster coordination between regulators, exchanges, blockchain analytics firms and law enforcement can help identify, freeze and recover stolen assets more effectively. Clear protocols for information sharing and incident response can make the ecosystem more resilient while giving investors greater confidence that there are mechanisms in place to respond when attacks occur.

Crypto is global by nature, so this cannot be solved entirely through domestic regulation. Attackers can move funds across jurisdictions, chains, and bridges. Greater international coordination will therefore be necessary.

The Biggest Weakness Is Often The Gap Between The Three

The strongest security framework is one where exchanges, investors and regulators complement each other. An investor cannot fix an exchange's signing process. An exchange cannot stop a user from voluntarily sharing a seed phrase. A regulator cannot continuously monitor every transaction or employee.

But each can make the others stronger. Exchanges can give investors better security tools and clearer information. Regulators can set standards without preventing responsible innovation. Investors can adopt simple security practices and demand greater transparency from the platforms they use.

The goal should not be to create a system that assumes attacks will never happen. That is unrealistic. The goal should be to build resilience, making attacks harder to execute, detecting them earlier, limiting the damage, and improving the speed of recovery when they occur.

Crypto's next phase of growth will depend on adoption, liquidity, regulation, and trust coming together. And the best way to build trust is by showing that security is not the responsibility of one participant in the ecosystem. It is a shared responsibility, with clear accountability at every layer.

(The author is the Head of Business at Mudrex)

Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.

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