Glossary
Centralized exchange (CEX)
A centralized exchange (CEX) is a company that lets customers buy, sell and store crypto through an account it manages, matching orders on its own systems and usually holding the funds on their behalf.
Also called CEX, Crypto exchange, Exchange platform, Custodial exchange, Trading platform, CASP (EU)
See also
A centralized exchange (CEX) is a crypto trading platform run by a company. Binance, Coinbase, Kraken, Bitpanda and OKX are examples. You open an account, verify your identity, deposit money by card or bank transfer, and trade through the company’s website or app. It is the most common way to buy a first cryptocurrency.
How a centralized exchange works
The exchange runs an order book: buyers and sellers post orders, and its matching engine pairs them. Trades happen inside the company’s database, not on the blockchain, which makes them instant and cheap. Your balance is an entry in that database. The coins themselves sit in wallets controlled by the exchange, which also handles deposits and withdrawals to and from the blockchain. Revenue comes from trading fees, spreads, withdrawal fees and services such as staking or lending.
Exchanges must verify customers’ identity (KYC) and follow anti-money laundering rules. In the European Union, crypto-asset service providers need a MiCA authorisation: the transitional period that let existing firms keep operating under national rules ended on 1 July 2026 at the latest. In the United States, platforms register with FinCEN and need state licences.
A concrete example
Emma wants $500 of bitcoin. She signs up on an exchange, uploads her ID, links her bank account and places a market order. The trade fills in a second. Her BTC appears in her account balance, but the exchange holds the keys. To move to self-custody, she would withdraw the BTC to her own wallet address.
Why it matters for users
A CEX offers fiat on-ramps, deep liquidity, customer support and a familiar interface. A regulated platform must also meet rules on capital, segregation of client assets and complaints handling.
Risks and limits
- Custody risk: if the exchange is hacked, mismanaged or goes bankrupt, client funds can be frozen. FTX halted withdrawals and filed for bankruptcy in November 2022.
- Account freezes, withdrawal limits and changes to listed coins or terms.
- Privacy: the exchange holds your identity and trading history.
- Availability varies by country; check that a platform is authorised where you live.
A decentralized exchange is the main alternative. Our guide How to choose a crypto exchange lists the criteria to compare.