If you want to trade crypto, you need a place called a crypto exchange. There are two main types, which are centralized (where a company manages everything) and decentralized (where nobody’s in charge).

WHAT IS CENTRALIZED CRYPTOCURRENCY EXCHANGE (CEXs)

A centralized cryptocurrency exchange (CEXs) is like a platform where people can trade their cryptocurrency, by acting as intermediary between buyers and sellers. It helps buyers and sellers find each other. Unlike decentralized exchanges (DEXs) where no one is  really in charge, CEXs are managed by companies that take care of the exchange and make sure everything is safe and works well.

The centralized platform uses an order book system to establish crypto prices, much like a traditional bank does, to set the prices of digital money.

Centralized Cryptocurrency exchange (CEXs) include;

1. Binance: Founded in 2017, the world’s largest exchange with many cryptocurrencies and users.
2. Coinbase: Since 2012, the top US exchange, user-friendly but with higher fees.
3. Kraken: Established in 2011, a trusted exchange known for low fees, suitable for various users.

So what features does an exchange need to have in order to be a CENTRALIZED CRYPTOCURRENCY EXCHANGE?

Here are the features;

1. It is governed by a single entity: In a centralized exchange, one group is in charge, making decisions and strategies quickly for smoother and faster services. Because of this, they can have cool tools for trading, handle regular money, make accounts easy, and help users. This makes lots of people join and trade quickly. When one group is in control, problems can affect everything. Rules in one place can harm your money. Trust is needed, but if the group misuses funds, you’re helpless. This leads to unfair actions in trading. When a company is in charge, they sometimes don’t tell us how they make their rules. This might be okay if you’re only buying digital coins and keeping them somewhere else. But many companies don’t let you do just that.

2. Custodial wallets: Centralized exchanges have security steps like passwords and codes. But they often ask you to use their wallets, not fully yours. They could take your access to the wallet. This lack of ownership comes with a risk: It means that the centralized entity that controls your funds may revoke your access at any point. 
3. It requires KYC: CEXs have a process called KYC (Know Your Customer) in place. This process involves the exchange asking users to provide official documents, like identification cards or passports, to confirm their identity. CEXs have to obey the law and check who uses them by asking for personal information. This can make your privacy less secure compared to DEXs, where you might not need to give as much personal information

https://www.ledger.com/academy/topics/crypto/what-is-a-centralized-cryptocurrency-exchange-cex#:~:text=Let’s%20get%20started!-,What%20is%20a%20Centralized%20Cryptocurrency%20Exchange%20(CEX)%3F,providing%20liquidity%20for%20supported%20tokens.