Third-party data breaches have exploded. The problem? Companies, including cryptocurrency exchanges, don’t know how to protect against them. When exchanges sign new vendors, most just innately expect that their vendors employ the same level of scrutiny as they do. Others don’t consider it at all. In today’s age, it isn’t just a good practice to test for vulnerabilities down the supply chain — it is absolutely necessary.
Many exchanges are backed by international financiers and those new to financial technologies. Many are even new to technology altogether, instead backed by venture capitalists looking to get their feet wet in a burgeoning industry. In and of itself, that isn’t necessarily a problem. However, firms that haven’t grown up in the fintech arena often don’t fully grasp the extent of the security risks inherently involved in being a custodian of hundreds of millions of dollars in digital assets.