CEX vs DEX: centralised vs decentralised exchanges in practice
Both let you trade crypto. One is a company you log into; the other is a smart contract you connect your wallet to. The differences matter when things go wrong.
A centralised exchange (CEX) is a company — Binance, Coinbase, Kraken — that holds your crypto in custody on your behalf and matches your orders against other users on their internal order book. A decentralised exchange (DEX) is a smart contract on a blockchain — Uniswap, Curve, PancakeSwap — that lets you swap one token for another without any custody. Both are "exchanges" but behave almost nothing alike.
Custody
CEX: the exchange holds your crypto. You trust them to protect it, not freeze your account, and remain solvent. DEX: you hold your crypto in your own wallet; the contract swaps on-demand and sends the result back to you. If the exchange goes bust, nothing happens to your funds.
KYC
CEX: fully KYC'd — passport, selfie, address. Required for the exchange to operate in regulated jurisdictions. DEX: no KYC. You connect a wallet; no personal data is collected. Trade-off: your transactions are public on-chain and traceable.
Supported assets
CEX: a curated list, usually major coins + a few hundred alts. Vetting process behind each listing. DEX: anything that exists on the chain, including unaudited scam tokens. More freedom, more responsibility.
Fees
CEX: 0.1-0.5% per trade for retail, lower with volume or holding the exchange's token. DEX: a small protocol fee (0.05-0.3%) + the blockchain's gas fee (highly variable: €0.5-€30 on Ethereum, cents on Solana).
Order types
CEX: full suite — limit, stop-loss, trailing stop, margin, perps. DEX: usually just swap at market price (though some DEX perp protocols now exist). For complex trading, CEX wins.
Regulatory status in the EU
CEX: must be MiCA-licensed to serve EU customers from end of 2025. DEX protocols without a legal entity fall outside the current MiCA scope (though this will tighten).
Practical recommendation
Use a CEX for fiat on/off ramps (deposit euros, withdraw euros). Use a DEX for swaps between crypto assets, especially longtail tokens not listed on CEXes. Never leave more than a short-term trading balance on either — hardware wallet for anything held longer than a few weeks.