CEX: Centralised Exchange

A centralised exchange (CEX) is a privately operated platform that acts as an intermediary between buyers and sellers of crypto assets. The company behind the exchange holds custody of user funds in wallets it controls, and it runs an internal order book to match trades. Users do not interact directly with a blockchain when placing orders - the exchange records transactions on its own internal ledger and settles to the blockchain separately.\n\nBecause a CEX holds customer funds, it is subject to financial regulation in the jurisdictions where it operates. In the UAE, crypto asset service providers must be licensed by either the Virtual Assets Regulatory Authority (VARA) in the emirate of Dubai, or the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM), depending on where they are incorporated and operating. The DFSA in the Dubai International Financial Centre (DIFC) has its own separate framework for crypto tokens. Always verify that a CEX holds a current licence from the relevant authority before depositing funds.\n\nThe central risk of a CEX is counterparty risk: if the company is mismanaged, hacked, or becomes insolvent, customer funds held in its custody may be lost or frozen. This is distinct from a decentralised exchange (DEX), where users retain custody of their own assets throughout a trade.

For expats in the GCC, the choice of CEX carries regulatory and practical implications. UAE residents should check VARA's public register of licensed Virtual Asset Service Providers (VASPs) and the FSRA's register for ADGM-licensed platforms before registering an account. Using an unlicensed exchange may offer no recourse if funds are lost, and could create compliance complications when repatriating proceeds.\n\nKYC (know-your-customer) requirements on licensed CEXs in the GCC typically require a valid passport and proof of local residency. Some platforms also report transaction data to tax authorities in a user's home country under international information-sharing frameworks - relevant for expats from countries with worldwide taxation. Check the exchange's terms and your home country's reporting rules before transacting.