The Binance hack—now acknowledged as the largest in history by value, reaching nearly $6 billion—has left the industry confronting a fundamental question: how can crypto holdings be safeguarded, and where should investors, institutional and retail alike, buy, hold, and sell digital assets?

The stakes extend well beyond Binance's own user base: the venue a holder chooses determines who controls the keys, what recourse exists if assets disappear, and whether recovery runs through a corporate balance sheet, a regulator, or a court.

The options span P2P networks, self-custodial wallets, centralized exchanges, banks, and institutionally offered Bitcoin ETFs or ETPs. Financial analysts and blockchain researchers are actively contrasting the security profiles of centralized exchanges (CEXs), crypto ETFs, and decentralized finance (DeFi).

Wall Street sees a silver lining

Cantor analyst Ramsey El-Assal suggested there may even be a positive signal in how quickly the industry responded. “While spectacular crypto hacks have become all too common, we believe the ecosystem is steadily adapting,” he said. He expects crypto stocks to recover, adding, “We would be buyers on weakness.”

TD Cowen's Lance Vitanza made a similar case, arguing the hack exposed weaknesses in Binance's own security rather than in the technology underpinning bitcoin or other cryptocurrencies. “We do not stop using dollars when a bank is robbed, just as car theft does not invalidate the automobile,” Vitanza wrote. “We believe Binance has more than enough liquidity to cover the hole,” the analysts added.

Where will crypto investors go?

Views diverge on the destination. Some believe decentralized exchanges will benefit, or that rival centralized exchanges will gain ground on Binance, while others expect investors to rotate into digital asset ETFs and ETPs given their safe-haven status.

Andrew Forson, President of DeFi Technologies, told Cryptopolitan that he considers the fund wrappers materially safer. “I believe investing in digital asset ETPs or ETFs is much safer; first, you have someone to call if something goes wrong or if assets are lost, as well as the backing of the company's balance sheet,” he said.

“Buying the direct token or digital asset puts buyers at a significant counterparty risk with the crypto exchange. This is an unpleasant reality. Financial institutions and asset managers have the insurance and legal firepower to fight back, while individuals do not,” he added.

For readers new to these wrappers: ETFs and ETPs trade on regulated securities exchanges, with the underlying coins held by custodians appointed by the fund issuer rather than sitting in an investor's exchange account.

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, went further, describing exchange-traded funds as the new crypto exchanges. In an X post, he stated, “Yes, this is why ETFs are the new crypto exchanges. You get (much) lower trading fees and added (adult) protection. Cheaper and safer.”

Centralized exchanges have strengthened their security and built SAFU funds—Binance's Secure Asset Fund for Users, an emergency reserve created in 2018—to absorb losses from hacks, but that protection is entirely corporate-dependent. If an exchange lacks adequate reserves or insurance, a hack can end in bankruptcy.

Analysts at Standard Chartered foresee the Binance hack significantly accelerating a mass migration to DEXs, where trades are executed directly between users without intermediaries. Platforms such as Uniswap, renowned for their strong security track record, are becoming increasingly appealing to users wary of centralized systems.

Yet the attacker's own behavior showed decentralization cuts both ways: blockchain data revealed the hacker immediately hunting for “exit ramps,” routing funds through decentralized protocols like Uniswap and Aave to swap stablecoins for Ethereum. DeFi offers no corporate or institutional safety nets either. If a smart contract contains a code vulnerability, or a user signs a malicious transaction—similar to the EIP-7702 delegation signature used in this exploit, an Ethereum standard that lets an ordinary wallet address delegate transaction authority to smart-contract code—funds can be permanently drained with zero recourse.

Are regulated crypto exchanges safer than unregulated?

In Abu Dhabi, now regarded as the global center for Binance given that all of its regulated activities and its three segregated licenses in ADGM form part of its international offering, the ADGM regulator—the Financial Services Regulatory Authority (FSRA)—issued a short but clear commentary, noting that it was engaging closely with Binance and would protect the interests of clients.

“The FSRA is aware of the matter relating to Binance exchange on 30 October 2026, concerning a security incident involving unauthorized withdrawals of assets. The FSRA is engaging closely with Binance and monitoring the incident. Protecting the interests of clients and supporting the integrity and orderly functioning of markets remain the FSRA's key priorities,” the statement read.

Soham Jethani, Partner at UAE-based Septten Advisors, who has supported VASP and fintech licensing across the GCC, Asia, and Europe, cautioned that a license alone guarantees nothing. “A centralized exchange is not inherently safer because it is regulated. Centralization concentrates control over customers' assets, and a failure in the people or systems exercising that control can affect a very large number of customers at once. That concentration is precisely why effective regulation matters so much,” he said.

Regulation remains paramount for centralized exchanges, he argued, because customers are entrusting someone else with their assets. “A credible framework needs enforceable segregation of client assets, independent controls over withdrawals, adequate financial resources and meaningful accountability when those safeguards fail. Insurance is expected to be part of that protection.”

Jethani pointed to FTX and WazirX as illustrations of what happens when customers lose access to their assets and recovery becomes dependent on lengthy court-led processes. The causes differed—FTX involved fraud and misuse of customer funds, while WazirX suffered a major wallet hack—and recoveries have occurred in both cases. It is a pattern familiar from Mt. Gox, the Tokyo-based exchange that collapsed in 2014, whose creditors began receiving distributions more than a decade later. Even so, he noted, repayment against a valid claim is not necessarily the same as getting your original crypto holdings back when you need them.

Self-custody, by contrast, removes dependence on the exchange but places responsibility for keys and transactions solely on the user. In short, human error doesn't disappear.

Are banks the safer bet for crypto?

As a growing number of banks enter the digital asset and tokenized deposit space—bank liabilities represented on a blockchain so they can move like programmable money—they could become the go-to venue for holding and transacting in crypto.

Stefan Deiss, CEO of The Hashgraph Group, which has built identity solutions on the Hedera DLT platform, told Cryptopolitan the attack relied on no advanced technique. “The attack on Binance didn't rely on anything state of the art nor was it AI in nature,” he said. “The attackers compromised one engineer's laptop and used his trusted access as their own. That is an identity problem: once a system believes you are someone it trusts, it lets you act.”

He argued banks already solved this problem the hard way. “In 2016, North Korean hackers used stolen credentials to try to move nearly $1 billion out of Bangladesh's central bank. Banks responded with tighter controls so that no single login can move large sums without independent checks. Crypto has grown so quickly that its security has focused on protecting the blockchain itself, while controls around the people and systems inside the business have been slower to catch up.”

Deiss believes crypto exchanges need to get identity right, especially as AI agents arrive. “Companies are now letting agents pay suppliers, move funds and approve transactions, and one hidden instruction in an email can trick an agent into working for an attacker. A nation-state can try that at scale. Every agent needs a verified identity, a human accountable for it, firm spending limits and an off switch.”

Binance restores withdrawals, covers most of the loss

Binance resumed phased withdrawals on November 1, noting in a blog post to customers that its teams had taken precautionary measures to safeguard the platform, conducted security assessments, and worked to verify the readiness of affected services.

The exchange reiterated that user funds remain safe and that Binance will absorb the financial impact of the stolen funds. It said it has been purchasing the remaining affected assets through market and OTC channels, and has now covered approximately 95% of the impacted amount.

From here, the observable markers are the completion of Binance's buy-back of the remaining affected assets, any follow-up from the FSRA as it continues monitoring the incident, and how trading activity distributes itself across DEXs, rival centralized exchanges, and ETF and ETP venues in the weeks ahead.

The question remains: if it hadn't been Binance—with its huge pool of SAFU funds and capital—could the exchange have weathered the storm?