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Crypto Brokerage vs. Exchange: Which is better?

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Swen Keller
In the crypto world Swen has consistently found success through his effective communication skills and the unique ability to navigate the details.
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The term cryptocurrency has been discussed in several print, media, and social media platforms over the past year. But what exactly is cryptocurrency? The core concept behind Bitcoin is that it is a digital currency that is unrelated to banks. What motivates crypto transactions, and how may beginners access them?

In this introductory lesson, investors asking ‘what is cryptocurrency?’ will find all the answers they need. We will look also examine if it is legal to buy or invest in cryptocurrencies.

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    Crypto Brokerage vs. Exchange

    The terms “crypto exchange” and “crypto brokerage” may walk parallel lines, but there is a subtle dichotomy between the two. A cryptocurrency exchange plays a matchmaker for direct peer-to-peer trades, while a cryptocurrency broker takes on the role of a trusted third party—an intermediary between traders, allowing for a seamless exchange of assets.

    However, at the end of the day, both seek to provide their users/clients with a successful trade. This blog will cover various aspects of crypto exchange and crypto brokerage, their key differences, similarities, examples, and more!

    Crypto Broker

    Think of it as an entity, either a company or a person, that acts as a middleman for a trade revolving around cryptocurrency. Their role is similar to conventional brokers, who mediate trades between assets or currencies. Crypto brokers enable you to sell your cryptocurrency for other cryptocurrencies or even fiat currencies (your typical currencies like the Dollar, Euro, or Pound) and vice versa.

    Cryptocurrency brokers are your gateway into and out of the crypto world, a guide, especially for novice investors who struggle to trade cryptocurrencies effectively on their own! However, they come with a price tag, a trading fee in return for their services to you.

    This trading fee varies from broker to broker and depends upon a diverse array of factors, such as the volume of trade or type of cryptocurrency or the cryptocurrency exchange you engage with.

    You may be familiar with different types of brokers in a traditional setting, like stockbrokers, insurance brokers, or real estate brokers. In comparison, crypto brokers are slightly different.

    Full-Service Brokers

    Full-service brokers are the way to go for those who want an all-inclusive, tailored approach to their trading and investment. These brokers offer comprehensive services like research, investment advice, portfolio management, and access to various financial markets.

    Full-service brokers are of particular importance for affluent investors who have to tend to other important financial activities. For them, these middlemen act as “managers of their assets” and keep a meticulous eye over their crypto holdings.

    Discount Brokers

    If you’re someone who’s actively involved in crypto trading, making it your daytime job but needs a helping hand, then discount brokers are a sleek and efficient choice. They offer important resources, such as direct market access or essential research tools, at only a fraction of the cost of discount brokers.

    Direct Market Access (DMA) Brokers

    Seasoned traders seeking next-level precision in their trades can consider DMA brokers. These specialists offer advanced trading tools and unrestricted access to financial markets, ideal for high-octane traders seeking maximum control over their investments.

    AI-Powered Robo Advisors

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    While these aren’t crypto brokers in the traditional sense, their jaw-dropping features make them worth mentioning. These robo-advisories deploy algorithms, which help them study, analyze, and predict, with great accuracy, the trends and fluctuations in the crypto industry. They are designed to help you invest your money in the right places and have proven to be quite successful lately.

    Some popular AI crypto advisors are Makara, Wealthfront, and Sarwa. Furthermore, besides crypto trading, brokers offer their clients additional services, which are discussed below.

    CFD Trading

    Trading CFDs (Contract for Difference) is a type of trading where you borrow funds from a crypto broker with a small capital of your own and use it to make an investment. If your investment pays off, you keep the entire profit and return the capital you acquired from the broker. In case you end up losing the money, you return the borrowed funds back to the broker, and your initial capital covers the loss. A quick note: Be wary of margin trading as it magnifies both profits and losses.

    Trading CFDs is a risky move, with chances of high rewards but excessive losses as well. The broker charges a fee for letting you invest the borrowed funds, which is how they profit. More about CFD Trading here.

    Portfolio Management

    As cryptocurrencies have exploded onto the financial scene, investors and traders have been clamouring for an effective and streamlined approach to managing their diverse crypto holdings. Experienced crypto brokers offer personalized management of your crypto holdings. Essentially, you have hired an expert to maintain your account. Commissions and fees structure may vary. This applies to copy trading services as well.

    What sets these services apart from traditional DIY investing is the level of sophistication and expertise that the crypto brokerages bring in.

    Unlike regular traders, these experts can keep up with the news, trends, and intricacies of the ever-evolving crypto market—and can undertake the management of your financial instruments.

    Research and Analysis (Tools and Articles)

    Brokers often provide clients with a suite of user-friendly applications, such as a portfolio management app by eToro, real-time chart frames with adjustable time frames, and MT4. In addition to this, cryptocurrency brokers also offer their clients insights and news, relevant to the assets of their clients. These include:

    Comprehensive Coin Guides: Readers can familiarize themselves with the basics of their crypto assets, so they can move towards a more independent form of trading in the crypto market.

    Technical Analysis: Aside from providing analytical charts, they help their clients understand them better by walking them through the latest trends, like entry and exit points in a market.

    Leading Cryptocurrency Brokers

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    We have compiled a list of top brokers with their trading fees structure to help you make an informed choice when it comes to cryptocurrency trading.

    Kraken: The perfect digital store where you can purchase all types of currencies, ranging from the old-school Bitcoin and Ethereum to relatively new and rising ones, Kraken comes with a highly intuitive user interface, so first-timers can navigate with ease.

    Additionally, Kraken is highly secure, as the platform has various security measures in place, such as using cold storage(offline storage of cryptocurrencies), a 2FA, and multiple levels of the verification process in your account. Despite being simple to use, it does not lack complex options for its more experienced traders, such as staking and margin trading.

    Learn more about Kraken here.

    Coinbase: Coinbase, the most popular crypto exchange in the United States, is a favored alternative for rookie investors due to its incredibly user-friendly design. It offers popular cryptocurrencies like Bitcoin, Ethereum, Litecoin, and over 50 other coins. It’s super easy to get started with a simple sign-up process and several fiat currency deposit options.

    Although it falls short when it comes to lower trading fees, especially compared to its competitors, it remains a reliable choice due to its high-security measures and liquidity. For a more detailed review, check out this article.

    BitStamp: The oldest, and most reputable on the list, BitStamp is best known for its rigorous security measures. In addition to 2FA, it is also equipped with features like mandatory confirmation emails for withdrawals, and robust adherence to Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.

    Please note that despite being a major cryptocurrency brokerage, Binance is banned in the US, following the government’s decision to safeguard users’ assets and interests.

    Crypto Exchange

    Crypto exchanges are marketplaces on the internet, harboring all types of traders who have gathered to trade their virtual assets. But it is not just a chaotic free-for-all platform. Instead, everything unfolds in a remarkably sophisticated manner. The exchange provides users with an order book, which lists who’s eager for buying and who’s eager to sell cryptocurrencies, as well as how much of it. And most traders are using a crypto wallet after going through the verification process.

    A dynamic stage for investors, a crypto exchange is the epicenter of the crypto world, governed by the laws of supply and demand. Each executed trade mirrors the sentiments, ambitions, and trends that shape the cryptocurrency trading landscape. There are various types of exchanges, which we will briefly examine.

    Centralized Exchanges (CEX)

    A natural development in the crypto ecosystem, CEX provided users with a familiar interface that we see in traditional exchanges for fiat currency. Over time, however, as government regulatory laws were introduced, their operations were impacted the most.

    Keep in mind that your funds are not directly under your control when operating on a CEX but rather are held within the platform. Therefore, investors may regard this as an impending threat, as there have been instances where the government has taken control of individuals’ assets over legal technicalities.

    Regardless, CEX is the basis for the adoption of cryptocurrency, serving as a platform for users to sign up and meet buyers and sellers of crypto assets. They usually have higher liquidity due to the presence of a centralized matching system, often allowing direct fiat-cryptocurrency exchange for less common cryptocurrencies (rare cryptocurrencies are often difficult to trade due to low liquidity in the market). Popular examples include Coinbase (most widely used in the US), Kraken, and Binance.

    Decentralized Exchanges (DEX)

    Adopted by many investors with privacy and security concerns, decentralized exchanges solely operate on a blockchain network. Unlike centralized exchanges, they do not have an authority running the show, and instead, capitalize on Smart Contracts to facilitate trade. This gives clients more autonomy over their trade, as they will be directly making the purchase from their crypto wallets (DEX are non-custodial by design).

    This also means that you control your own funds, and would need to connect to your wallet at the time of your transaction.

    Unlike centralized exchanges, decentralized exchanges do not ask you for any personal identity or information, as they are not holding any assets for you. Moreover, their liquidity is mainly supported by their users; therefore, it can be challenging to trade on these platforms effectively, with transactions taking longer to execute.

    Finally, as decentralized exchanges (DEX) are utilized mainly by experienced traders, their interface tends to be sophisticated, and platform administrators have no incentive to give support, making it a more challenging environment to traverse for beginners. Popular decentralized exchanges are UniSwap (ideal for Ethereum), PanCakeSwap, and Curve (best for Stablecoins). Find out more about DEX here.

    Hybrid Exchanges

    The name speaks for itself. Hybrid exchanges are an exciting and novel attempt to combine the pros of both, trading features of centralized exchanges and the security offered by decentralized exchanges.

    It takes order books (much like in a CEX) to swiftly match up users with each other, providing hybrid exchanges with higher liquidity than DEX. But unlike CEX, they let users trade on their own—directly from their wallets, and not store funds over the exchange.

    They also use Smart Contracts, require much less personal information than CEX, and strongly emphasize security. Some top hybrid exchanges include Joyso and TRON.

    Cryptocurrency Exchange vs. Cryptocurrency Brokerage: What's the Difference?

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    While on the surface, it may seem they both offer clients the same service: helping them trade; however, many things are different between the two entities. Here are a few of these differences:

    1. Cryptocurrency exchange matches buyers and sellers for direct, peer-to-peer trading, while crypto brokers execute trades on behalf of the users.

    2. A crypto broker with a simple and direct user interface is typically easier to use. While on an exchange, navigating might be challenging for inexperienced investors due to all the technicalities of trading involved.

    3. Trading fees are generally higher for brokers, and exchanges typically offer lower transaction fees. This is due to the level and breadth of service brokers offer. While on an exchange, you need to scout for a deal yourself.

    4. An exchange is well suited for experts and regular traders, and brokers are designed for newcomers with simplified processes.

    5. Crypto brokers offer users tools, such as portfolio trackers and analytical charts. These services can provide investors with outstanding leverage, helping them gain the most out of their investments and assets. These services are otherwise rare when it comes to exchanges, besides some popular ones.

    6. Both platforms execute robust security and privacy measures like using 2FA, hence, protecting users from malicious invasions. Keep in mind, though, that users bear more responsibility when operating on an exchange, as they are flying solo.

    7. Although regulations have been tight lately on both brokers and exchanges, with new laws dictating stringent trading policies, however, brokers have fallen into more scrutiny than their exchange counterparts. In fact, exchange services are also increasingly shifting to DeFi.

    So next time when you want to make a transaction, keep in mind these points to make an informed decision for yourself.

    Commissions and Fee Structures

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    Since both crypto brokers and cryptocurrency exchanges provide unique features and services, their fees are somewhat the same. As discussed before, brokers are generally more expensive to keep around, but let us discuss this in more detail.


    Any asset at a given time has two prices: the ask price and the bid price. The ask price is always higher than the bid price. Brokers utilize the gap between these prices, known as the ‘bid-ask spread’, selling you an asset for the ask price (higher fees) and buying an asset from you at the bid price (lower fees).

    In crypto exchanges, since you will be looking for traders on your own, you will enjoy greater autonomy over the final cost of your transactions (note: you could hypothetically sell your asset at the ask price or higher price, but it will take longer for your transaction to go through, and vice versa when buying).

    In fact, exchanges utilize this feature to increase liquidity in the market.

    Most exchanges list the fee structures of their platform in a table, with Takers and Makers. Takers are traders who accept trade offers from the order book, thus, reducing the order book and ultimately lowering liquidity, so they are charged more.

    Makers, on the other hand, place an order that doesn’t get executed but instead goes in the order book, so they are charged lower fees for adding liquidity in the market (crypto brokers act as market makers).


    Most brokers will charge you with their own commission on top of the spread, depending on your transaction’s size. For example, Kraken will charge up to 0.26% of your total transaction—this percentage usually decreases as the amount of transaction increases.

    On the other hand, exchanges only charge users transaction fees, which are paid to the miners on the blockchain network. Other ways exchanges can rack up money from your account includes the following.

    • If you are trading in fiat currencies for your transaction, exchanges might impose a currency conversion fee.

    • Deposit and withdrawal fees (limited to centralized exchanges). Since you are depositing funds and storing them over the platform, you will have to bear additional expenses in the form of deposit and withdrawal fees (the amount varies depending on the payment method).


    The distinction between crypto exchange and crypto broker lies within their roles in the execution of transactions in the decentralized system. A crypto exchange is a marketplace, where you can just show up and buy/sell within the confines of the financial rules and regulations of the platform.

    In contrast, brokers are merely your assistants, whom you pay to navigate the crypto exchange platform without going through the hassle yourself.

    Unlike exchanges, brokers offer you much more services by experienced individuals and is a costly, but safer gameplay, as compared to the dynamic and potentially complex nature of the exchanges. So tread carefully, because if you do not have what it takes, you may end up losing your assets in an exchange.


    Most frequent questions and answers

    Of course! Buying and trading cryptocurrency does not necessarily require a broker. To buy cryptocurrency without a broker, you can simply visit an exchange, such as Coinbase or UniSwap. You only need to sign up with your basic details and add a payment method to purchase cryptocurrency.

    Absolutely! You can trade(buy, sell, swap) your cryptocurrency and stablecoins over any crypto exchange. Please note that while most exchanges allow you to trade crypto assets, some types might not be supported everywhere. For example, you cannot trade NFTs in regular exchanges and must seek NFT marketplaces.

    Coinbase, with millions of trades every year, and a diverse arsenal of tools and features, such as analytical charts, a multi-functional wallet, and a blog, is perhaps the forefront runner in the race for best crypto broker. Other popular choices for the top spot are Binance, Kraken, and BitStamp, each with its own unique features.

    No. Brokers are not the same as a stock exchange. Brokers are intermediaries who help you secure a transaction in the market without you having to worry about any of it. On the other hand, the stock exchanger is not a part of the crypto world but instead of the centralized financial system, providing companies with equity by listing their shares to trade.

    The answer depends on your condition. Brokers should generally be preferred when you have little understanding of the market, or when you have a vast sum of cryptocurrency to trade. Since they charge hefty fees, you should avoid them over small transactions, or if you are an experienced trader.

    OQtima. With its friendly user interface, minimal transaction costs, and unique features to help you optimize your trade, OQtima is the best choice for most novel investors seeking a profit over their investments.

    Regardless of what you want to trade, you will need a bank account and many new investors use traditional fiat money. Fiat money, or fiat currency is the (usually) paper money we’re all familiar with. Fiat money is held in private bank accounts. When investors sell cryptocurrencies or other digital assets trading rate fluctuations often impact profits-which financial authorities may regulate.

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    Skrumble.com provides all its content for informational purposes only, and this should not be taken as financial advice to buy, trade, or sell any investment instruments or products, including but not limited to cryptocurrencies, or use any specific exchange. Please do not use this website as investment advice, financial advice, or legal advice, and each individual’s needs may vary from that of the author. Investing in financial instruments, including cryptocurrencies, carries a high risk and is not suitable for all investors. It is possible to lose the entire initial investment, so do not invest what you cannot afford to lose. We strongly advise conducting your own research before making any investment decisions. This post includes affiliate links with our partners who may compensate us.

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