Crypto exchange vs broker: how they differ and what you own
A crypto exchange is a marketplace where users trade, while a broker sells crypto to you. Each has different order, custody, and US regulatory rules.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- Exchanges match your order with other users on an order book.
- Brokers quote a price and may take the other side.
- Both carry counterparty, custody, and operational risks.
Each platform handles your order and crypto differently, and both carry risks.
What is the difference at a glance?
An exchange is a marketplace where users trade crypto with one another. A broker is an intermediary that sells crypto to you. Exchanges match orders between users, while brokers quote a price and may fill as counterparty.
How does each fill an order?
An exchange matches your order with another user's order on an order book. A broker quotes a price, may fill as counterparty, and its quote may differ from the best market price.
Who holds your crypto and what risks?
Exchanges often let you withdraw crypto to a wallet you control. Brokers usually hold crypto in custody for you. Both carry counterparty, custody, and operational risks.
How are they regulated in the US?
In the US, regulators may treat a crypto platform as an exchange or as a broker-dealer. The SEC oversees securities exchanges and broker-dealers, while the CFTC oversees commodity derivatives. Oversight rules are still changing.
Frequently asked questions
Sometimes. Dedicated exchanges usually allow withdrawals, while stock-focused brokerages often do not.
Usually not. SIPC protects stock brokerage accounts if the firm fails, but not crypto assets.
US platforms generally report certain transactions. The IRS treats crypto as property, so trading one crypto for another or paying with crypto is taxable, while buying with US dollars is not.
Check order handling and withdrawals. Exchanges match users on an order book and allow crypto withdrawals; brokers quote a price and hold assets.
