What is a CEX (centralized exchange)?

Who holds the crypto when you see it in your account on an exchange? On a CEX, short for centralized exchange, custody is usually handled by the company behind the platform. You log in with your credentials and place orders, but you don’t control the private keys that allow the coins to be moved.

Think of an organized marketplace with a central operator. You deposit euros or crypto and the platform updates your balance. When you place a buy order, the system usually matches it with sell orders through the order book. The exchange charges a fee for its service.

Trades within the platform usually just update its internal records, without each trade being recorded separately on the blockchain. If you request a withdrawal to a personal wallet, the exchange has to send the coins to your address over the relevant network.

Why it matters

For many users, a CEX is their first contact with crypto. It can offer euro deposits, an easy-to-use app, customer support and account recovery. It usually also requires customer identity verification (KYC), such as an ID document.

This convenience comes with dependence on an intermediary. The company controls how the service operates and can restrict or suspend withdrawals. We consider this distinction essential: a balance shown in an app is one thing, crypto in a wallet whose keys you control is another. Self-custody, of course, also brings the responsibility of protecting those keys.

What to watch out for

A hack, mismanagement or insolvency of the company can put funds at risk. Proof of Reserves offers some transparency, but doesn’t by itself prove that all of the exchange’s liabilities are covered.

In practice, check the trading and withdrawal fees, the limits and the supported transfer networks. Enable two-factor authentication (2FA) and watch out for fake login pages. 2FA protects access to your account, not against a possible collapse of the exchange itself.