What Is Cryptocurrency Exchange?
Also known as: Crypto Exchange, Digital Asset Exchange, CEX, DEX
In short
A cryptocurrency exchange is a platform where users can buy and sell cryptocurrencies for fiat money or other cryptocurrencies; there are two main types, centralized (CEX) and decentralized (DEX).
Centralized exchanges are operated by a company. Users open an account, pass identity verification (KYC) and deposit funds; buy and sell orders are matched in the exchange's order book. Assets are mostly held in wallets controlled by the exchange. These exchanges offer services such as fiat deposits and withdrawals, high liquidity, futures trading and customer support. Decentralized exchanges, on the other hand, run on smart contracts; users connect their wallet and swap, usually through liquidity pools, without giving up control of their assets.
When evaluating an exchange, legal status matters as much as fees, liquidity, supported assets and security practices. In Turkey, cryptocurrency trading platforms must obtain authorization from the Capital Markets Board (SPK) as crypto asset service providers under Law No. 7518 and are subject to supervision. In the European Union, similar services are licensed under the MiCA regulation.
The main risk with centralized exchanges is counterparty risk: if the exchange goes bankrupt, is hacked or misuses customer assets, users can lose their funds. Proof of reserves publications aim to make this risk partly more transparent. On decentralized exchanges, the prominent risks are smart contract bugs, slippage and fake tokens.
Last updated: · This content is for information purposes only and is not investment advice.