A centralized exchange (CEX) is a crypto exchange operated by a single organization. The operator manages the trading infrastructure, user accounts, internal balances, and usually the exchange wallets holding customer assets.

Users interact with the platform through an exchange account. After depositing funds, the exchange records the corresponding balance in its internal system. Trading is normally performed through a centralized matching engine that handles order matching.

Key characteristics of a CEX

  • centralized management;
  • internal accounting of trading balances;
  • centralized order execution;
  • exchange-controlled asset custody;
  • frequent use of KYC and AML procedures;
  • support for multiple trading pairs and order types.

The main difference between a CEX and a decentralized exchange is the trust model. With a CEX, users give the operator a degree of control over assets and trading operations. Account security, custody practices, withdrawal policies, and the operator’s infrastructure therefore become important considerations.