Differences between a cryptocurrency broker and an exchange

Filip26 października, 2022

A trader doesn’t need to trade his own deposited crypto or fiat currency, but he can use a different trading pair. The broker will find a counterparty for the transaction, in some cases, the broker can serve as a one and execute the trade. Brokers, like cryptocurrency exchanges, offer a similar account opening process; however, they have stricter conditions to follow.

  • You may be able to buy fractional shares of coins for pennies or just a few dollars.
  • That being said, it is difficult for the buyer to demand it from the seller.
  • Different exchanges offer various trading pairs, so it’s always an individual decision of the trader which one to choose.
  • Our list considers crypto exchanges, platforms and online brokers that offer crypto, as well as cash and payment apps that let you buy and sell Bitcoin, Ethereum and other digital assets.
  • KYC stands for “Know Your Customer” and AML stands for “Anti-Money Laundering”.

If we buy one Bitcoin, we pay at the moment (in December 2020) about €300 as a fee on the Coinbase crypto exchange for a complete Bitcoin. With the different brokers it’s different, but let’s say it’s somewhere between $10 and $30. When you want to keep your crypto coins for a longer time, you need to go for the crypto exchange. If you want to speculate and buy and sell quickly, for example, buy in the morning selling the afternoon if there is movement then you need to go for the Forex broker. When we buy Bitcoin, for example, we enter into a CFD with the broker, agreeing that if its value rises, the profit will be ours. A fall in BTC’s value, however, will result in a loss of funds.

The Crypto Trilemma Explained: What It Means for the Future of Cryptocurrency Payments

A crypto broker is a firm or an individual person who acts as a financial intermediary for persons who want to exchange their fiat money for cryptocurrencies. A cryptocurrency broker, like Bitpanda, provides online financial services for users who want to buy or sell cryptocurrencies (and other assets). For providing this service, a broker charges users premiums for using the platform. Choosing a cryptocurrency exchange is often the first step investors take when exploring the word of digital assets. While there are many ways to exchange cryptocurrencies for one another, centralized exchanges provide a relatively easy way to convert cash into coins and tokens. If you want to trade a large number of cryptocurrencies with a constant expansion of their available pool, a cryptocurrency exchange is right for you.

crypto exchange vs broker

Withdrawal fees are in flux, depending on the asset and the blockchain network being used to transfer funds. Typically, exchanges have fee sections they keep updating for all tokens. At the base level, both centralized crypto platforms offer the same service — convert between cryptocurrencies or between fiat money to crypto. Nonetheless, there are some key differences between a crypto exchange and a broker that should be considered when deciding on the right type of platform.

Crypto exchange vs broker: What is the difference?

Now that you have more detailed information about crypto brokerages and crypto exchanges, it is time to find out the main differences between them in the following section. Crypto exchanges are advanced tools used mostly by experienced crypto traders or those who have done their research and understand crypto exchange vs broker the fundamentals of crypto trading. It cannot be stressed often enough that reading up on crypto trading and learning how to trade in theory is essential before you begin trading in practice. Inexperienced traders tend to incur losses because they do not understand how a crypto exchange works.

crypto exchange vs broker

It comes down to personal preference and individual circumstances. Crypto brokers and exchanges provide the baseline service of allowing individuals to buy cryptocurrencies. Traditional crypto CFD brokers such as Plus500 and eToro are commonly used for asset speculation, traders don’t actually own the asset. Meaning, that they can’t access it on a blockchain, view its address on a blockchain explorer or transfer it to a non-custodial wallet. With the crypto broker, you trade personally with Robots – you are buying and selling daily, and you pay much lower fees. Decentralized crypto exchanges (DEX) distribute responsibility for facilitating and verifying crypto trades.

Cryptocurrency trading can take place in a variety of ways. Discover which methods are best for you.

You can either go with an exchange or a broker depending upon the amount of risk you can handle and the trading limit as well as criteria. If you want to earn larger profits over a longer period of time and have experience there is no harm in going with exchange platforms. However, if you lack basic knowledge and are new to cryptocurrency, trading with a broker is the safest option.

The biggest advantage of an exchange is a wide range of cryptocurrencies that can be traded on their platform. An exchange then acts as an intermediary, who enables the trade and charges a fee for this service. But something interesting we learned a few days ago is actually that the FCA regulated brokers are going to remove CFD trading from MetaTrader which was quite surprising. To open a crypto exchange account, visit the exchange’s website or download its app. Finally, don’t assume that an exchange is available in your country, or even state, just because you can access its website. Many state and federal governments are still figuring out how exactly they want to treat cryptocurrencies from a legal and tax standpoint.


Users can take advantage of Crypto.com’s utility token Cronos (CRO) to pay fees on the platform and earn other benefits. You should be aware of the risks with brokers since they will draw all their liquidity from external sources that they don’t control nor disclose. These sources can be based outside of Australian laws and regulations. Therefore, doing your due diligence on a broker can be challenging. Crypto exchanges can be quite slow, especially during periods of high volatility.

If you’re interested in buying cryptocurrency, you need to open an account with a crypto exchange. There are around 500 examples to choose from, and Forbes Advisor combed through the leading players to determine the best crypto exchanges for both new and experienced investors. You can, of course, create a very strong password and even enable 2-factor authentication, but, unluckily, this cannot guarantee 100% safety of funds. Besides, each crypto exchange security level is different, and one can’t tell what is going to happen going forward.

Cryptocurrency exchange vs broker

On a basic level, makers are orders that add liquidity to an exchange, meaning they do not fulfill standing orders. Takers, meanwhile, remove liquidity from an exchange by completing orders that are waiting for a trade. Depending on the exchange, maker fees are usually slightly less than taker fees, although this isn’t always the case.

crypto exchange vs broker

Meaning, that they can’t access the cryptocurrency on a blockchain, view its address on a blockchain explorer or transfer it to a non-custodial wallet. A cryptocurrency broker trades your funds through a dealer network. Cryptocurrency brokers are also known as an over-the-counter (OTC) market. Brokers can be individual or platform based but both play a role in finding and pairing buyers and sellers to complete transactions.

Cryptocurrency Broker vs Exchange: Which Should You Choose?

PayPal allows purchases to be made with crypto where available, but you will need to pay taxes on the sale of Bitcoin on top of any taxes related to the purchase of the goods or service. So if the price falls from $10,000 to $6,000, if we sell on $10,000, we will benefit https://www.xcritical.com/ from this difference of $4,000. Even if we didn’t buy anything previously, even if we didn’t have any coins previously. Others will just hold the trade for a few days and they will sell it. You may need to wait up to two days for verification to complete.


He started HedgewithCrypto to publish informative guides about Bitcoin and share his experiences with using a variety of crypto exchanges around the world. There are distinct differences between how a crypto exchange and broker work that can influence the deposit and withdrawal methods, supported crypto assets, and trading fees. When it comes to deciding between using an exchange or a broker there is no right answer.

So make sure you check which is the regulator for your country and choose a regulated broker. Coinbase is a regulated and licensed cryptocurrency exchange, for example. That’s why we initially started using it and we saw it’s super friendly and super easy.