Centralized exchange (CEX)
Also called: CEX · crypto exchange · exchange
Definition
A centralized exchange (CEX) is a company-run trading platform where you deposit funds into an account and trade crypto through the exchange's order book, with the company holding custody of your assets.
How centralized exchange works
Binance, OKX, Bybit, Bitget, Coinbase and Kraken are examples of centralized exchanges. They match buyers and sellers in an order book, offer spot trading and often futures, earn products, copy trading and fiat on-ramps. Most require identity verification (KYC) before you can trade or withdraw.
The convenience comes with custody risk. When your coins sit on an exchange, the exchange controls the private keys and you hold a claim on its books. If the company is hacked, freezes withdrawals or fails, you depend on its reserves and on the law where it operates. Proof of reserves reports, licensing and a long track record help you judge an exchange.
Exchanges differ in fees, available coins, liquidity, supported networks, futures rules and which countries they serve. Compare maker and taker fees, withdrawal fees and order book depth for the pairs you actually trade, and check whether the exchange is permitted to serve users in your country.
Example
Suppose you trade 20,000 USDT of volume a month in spot. Exchange A charges 0.10 percent taker fees and Exchange B 0.08 percent. On A you pay 20 USDT a month in fees, on B 16 USDT, a difference of 48 USDT a year. If Exchange B's order book is thinner and you lose 0.05 percent more to slippage on each market order, that adds 10 USDT a month and wipes out the saving.
Common mistakes
- Leaving all your crypto on one exchange without considering custody risk.
- Comparing exchanges only on headline fees and ignoring spreads, slippage and withdrawal fees.
- Using an exchange that does not serve your country, then getting stuck at withdrawal or verification.
Learn and practise
Try it on an exchange
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nexu888Open OKXFAQ
What is the difference between a CEX and a DEX?
A CEX is run by a company that holds your funds and matches orders. A DEX runs on smart contracts, and you trade directly from your own wallet.
Are centralized exchanges safe?
Large, regulated exchanges with proof of reserves and strong security are safer than unknown ones, but any custodial platform carries some risk. Many people keep long-term holdings in self-custody.
Why do exchanges require KYC?
Anti-money-laundering rules in most countries require exchanges to verify customer identity before allowing trading or withdrawals.