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CEXes vs DEXes: Regulatory Compliance
by BSC News
November 1, 2022
The behavior of DEXes and CEXes is different, and their role in blockchain and DeFi serve various products and services for different motivations.
Centralized Exchanges (CEX) and Decentralized Exchanges (DEX) operate differently regarding regulation.
Here is how the two differ.
Crypto Exchanges deal with valuable virtual assets, which makes them a threat to the financial ecosystems. Crypto Exchanges can act as a non-state off-ramp for criminals to whitewash money to make it appear legitimate Financial malefactors can target them for this reason.
These wrongdoers range from scammers, inside traders, and hackers to market manipulators. Governments should regulate exchanges to avoid such entanglements and protect users.
CEXes and DEXes have different governance structures. This difference is explained in a recent BSC News article. These structures can be huge factors in determining fraud risks. Here is how exchanges differ in regulatory compliance.
CEXes, despite being more regulatory compliant than DEXes, are involved in more prominent financial misdoings. Overall, CEXes need more oversight to protect users and prevent criminal wrongdoing. DEXes exist to behave outside of regulatory compliance, and users must acknowledge the risks when engaging with any DEX.
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