In both cases, the registration process has been largely standardized and quick to create an account. They require an upload of an ID document (driver’s license, passport), a photograph holding the ID or payment exchange vs broker method, or even supplying utility bills matching the valid ID name. In terms of safe, the larger the exchange or broker is, the more likely it is to be more secure with bank-like account security measures.

A lot of the biggest crypto trading platforms including Swyftx and Coinbase are in fact brokers. Most brokers require their users to complete Know Your Customer (KYC) verification when signing up. This is a process that typically requires users to submit a photo of their government-issued photo ID (i.e. a driver’s license or passport). KYC serves an important purpose for avoiding association with tax fraud and money laundering. The key thing to remember is that brokers will be dealing with transactions as they come.

Crypto broker vs exchange: The key distinctions

The broker receives the order and if the brokerage has those shares available, they will most likely fill Amy’s order immediately. If they don’t they could buy those shares on the exchanges or from other brokerages. They may not place the order in the amount of 10,000, grabbing instead 500 to 1,000 shares at a time to deliver to Amy after the funds settle. This structural difference between the two models leads to tangible differences in the functionality of exchanges and brokerages. All of which sounds like a compelling case for using a broker in your trading, although caution is advised.

You can also bid for values here and that is the major crypto exchange vs broker difference. You can bid on your own rates but the purchase will only be completed when any buyer shows interest in your specified rate. Certain exchange applications, however, set a specific exchange rate according to past records and volatility of the market prices. You particularly come across two types of exchanges, a centralized and decentralized exchange.

What is a cryptocurrency broker?

If you’re just looking to buy and hold some cryptocurrencies, then an exchange would be the better option. But if you’re interested in speculative trading, then a broker could be a better fit. Crypto exchanges, on the other hand, have stricter KYC/AML policies in place and are subject to more regulations. They also charge transaction fees, but their registration process is usually more complicated. Let’s compare a crypto exchange vs a broker in our comparison table so it’s understandable that each of the solutions suits a different person and user case.

exchange vs broker

A broker is regulated, audited and its funds are on their bank accounts and even if they are hacked, due to the afore mentioned reasons, the client can be compensated in some way. Professional traders can also use their extra tools such as technical analysis and automated trading strategies. Purchasing cryptocurrencies for fiat money and trading various cryptocurrencies between each other, for example when you want to exchange your Bitcoin for Ethereum.


The U.S. forex industry uses “introducing broker” and “white label” categories to market its services and build its businesses. The introducing broker denotes a smaller operation that refers clients to a large broker in exchange for rebates or other incentives. In white labeling, the small company rebrands the large broker’s trading platform, allowing the big operation to execute trades in the background. Both practices may increase operating costs, encouraging these businesses to widen bid/ask spreads and increase fees. Total trade value determines the credit or debit in this calculation, not just the portion over the account balance.

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A brokerage is always taking the other side of the trade, so they can be more flexible with the settlement of assets. Many brokerages will allow traders to lock in a trade at a certain price even if they are unable to pay for the asset immediately. This is useful for traders who decide to trade an asset on short notice or would prefer to keep their assets elsewhere until they are traded. With brokerages, liquidity is determined by the brokerage itself, not other traders in the market. As long as the brokerage is willing to accept an order the trader will be able to execute their transaction. A brokerage sets their own price for assets, but this price is influenced by the price of the asset on other markets.

What are the main differences between exchanges and brokers?

As for withdrawals, broker terms are usually still much more attractive than those of a crypto exchange. Instead of paying 5% or 6%, you just have to pay a fee of between 0% and 3%, which depends on your withdrawal method. Let us focus on some of the key differences we can see while working with a crypto broker or an exchange.

Trading rate fluctuations and investing are the two most common ways crypto brokerages offer to increase profits. Derivatives containing cryptocurrencies may take the form of cryptocurrency futures, crypto options, or trading CFDs. Signing up with a broker is not a very difficult thing either, it is mostly the same as on an exchange. However, in order to deposit funds and start trading, verifying your account is mandatory. As a rule, you will be required to submit scan copies of one or two docs, those being your ID and proof of address.

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You should also make sure you can access your crypto broker platform 24/7 via desktop and mobile apps. With a broker, an organization sets the price and fee that they’re willing to sell for. They either hold the funds or work with a network of other brokers in order to keep sufficient supply. Brokers will likely keep prices similar to that of others in the same markets in order to keep demand for their services. Take your time when looking for a forex broker because a bad decision can be costly.

  • Kevin started in the cryptocurrency space in 2016 and began investing in Bitcoin before exclusively trading digital currencies on various brokers, exchanges and trading platforms.
  • Of course, to do this, they will need to purchase crypto through another exchange or broker and then send it to the new wallet address of the exchange.
  • All terms and conditions are already set including how much information you need to share, limits of withdrawal and investment, and which currencies can be traded.
  • Through its user-friendly interface, it has increased feasibility for traders and investors, who can now make their way into the crypto market with ease through this app.
  • Buying and selling cryptocurrencies on a broker holds a number of advantages for users.