What is a CEX?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
A CEX is an operator-run exchange that holds customer assets and matches their trades. It gives you fiat deposits and human support — but while funds sit there, the operator holds the keys. In Japan, running one requires registration with the Financial Services Agency.
Key points
- The operator custodies assets and matches orders
- Fiat rails and identity verification are part of the deal
- Japanese operators must register with the FSA
- While deposited, the operator holds the keys, not you
Definition
A crypto exchange where a company takes custody of user funds and intermediates trading through an order book or a dealer desk.
Depositing yen from a bank account and clicking buy is, in almost every case, trading on a CEX. Balances are tracked in the operator's internal ledger, so the trades themselves never touch a blockchain. Only a withdrawal produces an on-chain transfer.
Under Japan's Payment Services Act, only firms registered with the FSA as crypto asset exchange service providers may operate domestically. Registered operators face requirements such as segregating customer assets and holding a defined portion in cold storage. Check the FSA's published list before signing up.
Most offer both order-book trading and a dealer-style 'sales' interface, and the dealer spread is typically much wider. For the same asset, which route you use materially changes what you pay — worth understanding on day one.
Watch out for
- · Unregistered offshore venues leave you outside Japan's protections if something goes wrong
- · Exchanges have failed or been hacked, and customers have not always been made whole
- · 'Zero commission' dealer pricing still costs you through the spread