A CEX (Centralized Exchange) is a platform such as Binance, Coinbase, or Kraken where you buy and sell cryptocurrencies through a company that manages the order book and holds custody of users' funds, similar to how a traditional broker manages shares.
Advantages over a DEX
- Usually simpler to use, with customer support and account recovery if you lose access.
- Lets you buy crypto directly with euros or other fiat currencies, something most DEXs don't offer.
- Fees and liquidity are typically more predictable for large trades.
The custody risk
"Not your keys, not your coins": while your cryptocurrencies sit on a CEX, you don't control the private keys — instead, you're trusting the company to manage them properly and avoid a hack, insolvency, or a freeze on withdrawals. That's why it's common practice to move amounts you're not actively trading to a cold wallet.
Regulation
In the European Union, the MiCA regulation requires CEXs serving European customers to meet licensing, transparency, and fund-safeguarding requirements, in an effort to bring their oversight closer to that of other financial intermediaries.