Reporting requirements for Cryptocurrency investors are becoming stringent in Centralized Exchanges.  This has left several users move to Decentralized exchanges.  The regulatory environment is weighing heavy on users as there is a compulsory call for KYC and other paperwork in CEX.  This has made users to shift from CEX to DEX.  Regulation is only going to have users move from CEX to DEX.

There is no denying that DEX facilitating DeFi space have contributed to resilience in spot-trading volume.  However, Collapse of platforms like Celsius Network and Voyager Digital highlights the risk of storing assets with CEXs.

A worried Celsius investor was like: “How do we get our small amount of coins back? Especially for those outside the US.”  Further, Questions about risk management practices and how the funds are being used is brewing among investors. Hoping for positive news, while worried about their losses Celsius users “realize that the longer it takes to resolve custody and withholds there’s less money there is to earn for account holders due to lawyers burning money.”

It is Courts and Hearing season at Celsius Network.  Looks like Wasted opportunity and nothing is getting resolved anytime soon for investors.

For those who are new, it helps to understand the differences between CEX and DEX.

Top Centralized Cryptocurrency Exchanges (CEX) are:  Binance, Coinbase Exchange, FTX, OKX, KuCoin, Gate.io, Huobi Global, Kraken, Binance – US, Bitfinex, Crypto.com.

Top Decentralized Cryptocurrency Exchanges (DEX) are:  Uniswap (V3), DODO, PancakeSwap (v2), Curve (Ethereum), Uniswap (Polygon), Kwenta, Uniswap (v2), Balancer, Uniswap (optimism), Shibaswap.

Why are Decentralized Market Places are Preferred?

Decentralized marketplaces are preferred by investors due to less censorship, the ability to prevent market manipulation, and of course users need not transfer their asserts to a third party.

Why Centralized Cryptocurrency Exchanges are Powerful?

The reality is that most of the trading volume rests with Centralized Cryptocurrency exchanges.  Therefore, DEXs do not have as much volume as the CEX. Therefore, DEX do suffer liquidity issues. Thus, when the trading volumes are low, it can be difficult to find buyers and sellers.

What is Good about CEX and DEX?

Those who want to buy and sell digital assets with their fiat currency will find CEX more convenient. DEX is good for those who are trying to interconvert between different types of cryptocurrencies. The users need to remember the passwords for their wallets and if they lose it they have no option of recovering it anyway.

With CEX, the experience is beginner friendly.  The extra layer of security facilities comfort and reliability in the trading process. Margin trading is one thing that attracts users to CEX. The disadvantages like hacking, high transaction fees, and issues with fraud when CEX offer custodian services is still an issue.

Conclusion: In the end, investment is all about hope for profits.  Cashing out profits means a need for liquidity.  CEXs are more equipped with liquidity.  So, the game seems to be more in favor of CEXs.