What is phishing-resistant MFA and how to protect your crypto assets?

Key takeaways

• Regular MFA can be vulnerable to phishing attacks, while phishing-resistant MFA, using security keys or biometrics, offers enhanced protection.
• Phishing-resistant MFA requires a physical security key or biometric verification, making it extremely difficult for hackers to access your account, even with your password.
• Governments, such as the US, are now mandating the use of phishing-resistant MFA for federal agencies, emphasizing its importance in safeguarding digital assets.
• While phishing-resistant MFA is powerful, pairing it with alternative methods like hardware wallets, email alerts and safe browsing practices creates a comprehensive defense for your crypto assets.

Phishing attempts are common in the cryptocurrency world. Hackers are always trying to find new ways to deceive victims into giving up their login credentials so they can steal their assets. You may think that your crypto wallet is protected via a password. However, it may no longer be secure enough with just a password, as scammers easily bypass basic security methods.

Crypto phishing scams targeted over 324,000 victims, losing almost $300 million in 2023. These phishing attempts often targeted consumers by using fake airdrops, stolen social media accounts and malicious advertisements on platforms such as Google and X. Moreover, crypto industry losses arising from phishing attacks exceeded $66 million in August 2024, as reported by Scam Sniffer in a Sept. 3 X post.

You might be wondering: Most cryptocurrency wallets and exchanges already mandate multifactor authentication (MFA). So, why are phishing attacks still so common?

MFA is indeed a critical security measure, but by requesting an additional factor, such as a code sent to your phone, in addition to your password, MFA offers an extra degree of security. Plus, phishing attacks can still target traditional MFA. Hackers might intercept or deceive you into disclosing those codes if you’re not careful.

This is where phishing-resistant MFA comes in. But what exactly is it, how does it work, why use it for crypto, what are its benefits, and how to protect your digital assets using this variant of MFA? Let’s find out.

What is a phishing-resistant MFA?

Phishing-resistant MFA is different from regular MFA because it uses methods like security keys or biometrics (fingerprints or face scans) to keep your accounts safe from hackers.  

So, even if you are tricked into sharing your password, a scammer can’t access your account without your physical security key or fingerprint. Using a key and your fingerprint to unlock your account is mandatory.

Governments view this method as necessary for security and are now stepping in to make this protection standard. In fact, the US government requires federal agencies to use phishing-resistant MFA to guard against cyberattacks.

How does phishing-resistant MFA work?

Before diving deeper into how it works, let’s first understand the concept of authentication. 

Verifying that someone is who they claim to be is called authentication. 

Traditionally, authentication was all about something you know (like a password) and something you have (like a code sent to your phone), but phishing-resistant MFA adds another layer by incorporating something you are or something you have in a securer form.

Different methods used to implement phishing-resistant MFA include:

• Security keys: Security keys are physical devices that you connect to your computer or mobile device; they frequently resemble USB sticks. The security key connects to the authentication server to confirm your identity when you want to log in. A hacker cannot access your account without the physical key, even if they know your password. Some cryptocurrency wallets, such as Trezor and Ledger, support security keys. These wallets ensure that your funds stay safe even in the event that your password is stolen by needing a physical key to authorize transactions.
• Biometrics: Unique physical traits like fingerprints or face recognition are used in biometric identification to confirm an individual’s identity. This method is secure because biometric data is difficult to duplicate or steal. By providing biometric login options for their mobile apps, platforms such as Coinbase and Binance enable users to safely access their accounts without depending exclusively on passwords.

Did you know? While not fully phishing-resistant, apps like Google Authenticator and Authy offer better security than SMS codes. They generate time-based one-time passwords (TOTPs), which are harder for hackers to intercept. Many crypto exchanges now require these apps for added protection, going beyond just a password to secure your assets.

How does phishing-resistant MFA protect crypto?

The irreversible nature of crypto transactions makes securing your crypto assets paramount. Phishing-resistant MFA offers various benefits and protects your crypto in several ways:

• Protection against phishing attacks: MFA’s resistance to phishing attempts reduces the likelihood of being a victim of such scams. Hackers cannot access an account even if they fool a user into disclosing their password on a fraudulent website since there is no physical security key or biometric information. 
• Reduced risk of SIM swapping: Traditional MFA techniques that depend on SMS codes are susceptible to SIM swapping attacks, in which cybercriminals hijack your phone number to obtain your authentication codes. Because phishing-resistant MFA does not rely on SMS-based verification, this risk is eliminated.
• Enhanced security against credential theft: It ensures that stolen passwords are insufficient for illegal access on their own by requiring a physical security key or biometric verification. Hackers would need the actual device or biometric information, both of which are more difficult to acquire.
• Compliance with security standards: Using phishing-resistant MFA adds another level of legitimacy and trustworthiness for cryptocurrency platforms and users while complying with industry security requirements and laws. 

Did you know? Approval phishing scams trick victims into signing malicious blockchain transactions, giving scammers permission to drain tokens from their wallets. Some victims have lost tens of millions of dollars. Chainalysis’ “The 2024 Crypto Crime Report” identified over 1,000 addresses involved in these scams.

How to set up a phishing-resistant MFA for your crypto wallet

Feel like implementing a phishing-resistant MFA? Don’t worry, it is a straightforward process. Here’s a step-by-step guide to securing your crypto assets:

• Step 1: Choose a compatible wallet or exchange. Select a crypto wallet or exchange that supports phishing-resistant MFA, such as Ledger, Trezor or MetaMask. However, be cautious when using commercial wallets or exchanges, as they may be more vulnerable to large-scale attacks due to their popularity. Always verify the platform’s reputation and security measures.
• Step 2: Acquire a security key. Purchase a trusted security key, such as YubiKey or Google Titan, to enhance the security of your wallet or exchange. 
• Step 3: Enable MFA on your account. Go to the security settings of your wallet or exchange account and enable phishing-resistant MFA.
• Step 4: Register your security key or biometric data. Follow the setup instructions to register your security key or set up biometric authentication — e.g., fingerprint or face scan.
• Step 5: Test the setup. Perform a test login to ensure the MFA works properly and secures your account.
• Step 6: Keep security keys safe. Store your security key in a secure place (such as a safe); avoid leaving it connected to devices when not in use; and regularly review your account’s security settings to ensure ongoing protection.

Alternative crypto asset protection strategies

While phishing-resistant MFA is a powerful tool, you could combine it with other security measures that can protect your crypto assets comprehensively. Some additional protection strategies include:

• Enable email notifications: Setting up email notifications for all account activities, such as logins and transactions, could trigger an alert on unauthorized actions that you can respond to immediately.
• Backup your recovery phrases: Securely store your wallet’s recovery phrases offline in multiple locations, ensuring the recovery of your assets even if your device is lost or compromised.
• Regularly update software: Ensure your wallet, exchange apps and operating systems are up-to-date. Such updates often include critical security patches that protect against known vulnerabilities.
• Utilize hardware wallets: They store your private keys offline, making them immune to online hacking attempts. If you trust commercial wallets, this could be an alternative secure medium for you.
• Practice safe browsing: Be cautious of the websites you visit and avoid clicking on suspicious links or downloading unknown attachments. Use reputable browsers and consider browser extensions that enhance security.

Prevention is the best cure

By implementing phishing-resistant multifactor authentication, you not only protect your cryptocurrency holdings from illegal access but also follow industry best practices approved by security experts and governments. 

When combined with other security measures like hardware wallets, secure online browsing and frequent software upgrades, phishing-resistant MFA creates a strong barrier against many risks in the cryptocurrency world.

Avoid becoming another statistic by falling prey to phishing scams. Proactively safeguard your cryptocurrency investments with phishing-resistant MFA, and experience the comfort of knowing your digital assets are safe.