Learn / Beginner · Using Crypto Safely

What is a crypto exchange?

Beginner · Using Crypto Safely · about 5 min read

A crypto exchange is a marketplace where you can swap money for crypto, or one crypto for another. The big question is who holds your coins while you trade.

Two kinds

• Centralised exchange: a company runs it and holds your coins for you. It usually asks for identity checks, charges trading and withdrawal fees, and tends to have more buyers and sellers, so trades are easier to complete. The saying “not your keys, not your coins” is about this trade-off: you depend on the company.
• Decentralised exchange: smart contracts run it, and you trade from your own wallet, keeping your own keys. It usually has no identity checks, charges network fees, and often lets you swap crypto only for other crypto and stablecoins, not for ordinary money.

What can go wrong

• A centralised exchange can be hacked or can freeze an account.
• In November 2022 the exchange FTX stopped withdrawals and filed for bankruptcy on 11 November. Reports said customer deposits had been lent to a sister company, and prosecutors began an investigation.
• On a decentralised exchange, a smart contract can have flaws, and unchecked new tokens can be rug pulls, where the creators vanish with the money.

Keep in mind

• Before opening an account, check who runs the exchange and where it is regulated. Be wary of any site that promises guaranteed returns.
• Rules for crypto businesses in Trinidad and Tobago are changing. Read Is crypto legal in Trinidad and Tobago? and check the TTSEC list of approved providers before using a local business.
• General information, not financial advice.

What an exchange charges

Few exchanges are free. Fees usually show up in several places, and the headline trading fee is only one of them:

• Trading fee. A percentage of each trade, which may differ for people who place an order that waits and people who take an existing order.
• The spread. The gap between the price to buy and the price to sell. Some sites with "no fee" earn from a wider spread.
• Deposit and withdrawal fees. Charges for putting money in, or for moving crypto out to your own wallet. Network fees may be added on top.
• Conversion fees. Costs for changing between currencies, which matters if you earn in TT dollars and the exchange works in US dollars.

Read the fee page before you deposit, and compare the full cost of a small trade with a large one.

Identity checks and why they exist

Centralised exchanges usually ask for a photo ID and proof of address before you can trade. This is part of the rules that financial businesses follow to stop money laundering and fraud. It also means the exchange holds personal documents, so use only the official site or app, and use a unique password and an authenticator app for the account.

How to check an exchange before you sign up

• Who runs it? Look for the company name, the country it is registered in and named leadership. Anonymous operators are a warning sign.
• Where is it licensed? Find the licence on the regulator's own website, not just on the exchange's page.
• Does it serve customers in Trinidad and Tobago? Read its terms. Since December 2025, local law temporarily prohibits virtual asset business in or from Trinidad and Tobago until 31 December 2026 unless the TTSEC has approved it. The TTSEC says personal use by individuals is not covered. Read our rules lesson.
• What does it say about your coins? Check whether it separates customer assets, publishes reserve reports or audits, and how it handled past problems. Reports are not a guarantee, but silence is a signal.
• What security does it offer? Look for authenticator-app sign-in, security keys, withdrawal allowlists and alerts.
• How easy is it to get out? Check withdrawal limits, delays and the fee to move crypto to your own wallet.

Fake exchanges and fake apps

The FTC lists unexpected contact from someone offering investment advice, promises of guaranteed profits and pressure to act at once as common signs of a scam. Fake exchanges copy real brand names, show impressive balances, then block withdrawals. Search for the company name together with words like "review", "scam" or "complaint" before depositing, and reach the site through a bookmark or the official app store listing, not through an advert.

Keeping coins on an exchange

Ethereum's guide notes that exchanges hold custody and tie your access to a username and password, so funds are at risk if the exchange runs into trouble. A common approach is to treat the exchange as a place to trade and to hold only what you are actively using there. How much to keep on an exchange is your own decision, and it depends on how much you could afford to have frozen.

Common mistakes

• Choosing an exchange because of a sign-up bonus rather than its record and rules.
• Ignoring the withdrawal fee until the day you want to leave.
• Using the same password as for your email.
• Clicking a search advert for an exchange and ending up on a copy of the site.
• Leaving all coins on one exchange with no thought for what happens if it fails.
• Sending to an exchange address on the wrong network.

Try it yourself

Do not open an account or send money for this exercise.

1. Pick two exchanges that are well known to you. On each one's own website, find the fee page and write down the trading fee, the withdrawal fee for one coin and the deposit options.
2. Find each one's licence or registration on a regulator's website and note where it is based.
3. Find what each says about customers in Trinidad and Tobago or the Caribbean.
4. Write one line on which you would trust more, and what would change your mind.

Key terms

Exchange, centralised, decentralised, custody, identity check, liquidity.

Sources and credits

Custody and exchange risk: ethereum.org, Wallets. Scam warning signs and checks before investing: US Federal Trade Commission. Trinidad and Tobago law: TTSEC fact sheet on the 2025 Act. FTX collapse, November 2022: Reuters via Euronews and Steptoe explainer. General information, not financial advice.

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