A centralized exchange (CEX) is a company that matches buyers and sellers and holds your assets while you trade. A decentralized exchange (DEX) is a set of smart contracts, usually a liquidity pool, that you trade against from your own wallet. The trade-offs show up in custody, pricing and protection.
| Centralized exchange (platform) | Decentralized exchange (protocol) | |
|---|---|---|
| Custody | Platform holds assets | You keep them until the swap |
| Identity checks | Yes (registration and AML rules) | Usually none at the protocol level |
| Pricing | Order book | Liquidity pool formula (price impact, slippage) |
| Fees | Trading fees, spreads, withdrawal fees | Pool fee plus network gas |
| Listings | Restricted by platform terms in Canada | Anyone can create a pool, including scam tokens |
| Canadian registration | Must register to serve Canadians (CSA) | None |
| Key risks | Platform failure, freezes | Fake tokens, malicious approvals, contract bugs |
The DEX swap infographic shows how a pool's price moves with trade size. On a DEX, always check the token's contract address from an official source: anyone can create a token with a familiar name.
Questions people ask
Do crypto exchanges need to be registered in Canada?
The CSA says crypto platforms serving Canadians, including foreign ones, must register with provincial or territorial securities regulators (page updated 2025-10-22).
Is a DEX regulated in Canada?
Canadian platform registration applies to companies that operate platforms. When you swap through smart contracts from your own wallet, none of those platform protections apply to you.
What is slippage?
Slippage is the difference between the price you expect and the price you get, often caused by price impact in a pool or by the market moving before your transaction confirms.
Sources and dates
- Crypto platforms: regulation and enforcement actions — Canadian Securities Administratorsin force
Page date 2025-10-22 · checked 2026-10-30. Platforms serving Canadians, including foreign ones, must register; operating platforms sign a pre-registration undertaking while under review. - Crypto platforms authorized to do business with Canadians — Canadian Securities Administratorsreference
Page date 2026-09-18 · checked 2026-10-30. The official list of authorized platforms, with links to each decision. - Decentralized finance (DeFi) — ethereum.orgreference
No date shown on page · checked 2026-10-31. Overview of DeFi building blocks on Ethereum.
Education only. Nothing on this page is financial, investment, tax or legal advice, or a recommendation to buy, sell, stake, lend or borrow any crypto-asset. Crypto-assets can lose some or all of their value and are not covered by CDIC. Canadian rules change: check the dated sources above and talk to a qualified professional about your situation. Full disclaimer.