Crypto Exchanges: Licensing, Custody and Costs

A crypto exchange matches buyers and sellers of digital assets and usually keeps the coins for its customers as well. That combination of trading venue, broker and custodian in one company is the main difference from a stock exchange, and the source of most risks. This page explains what to look for. It names no providers and does not rank them. Prices and market values of individual coins are on the cryptocurrency overview .

Exchange, broker and decentralized exchange

• Centralized exchange. An order book where customers trade with each other; the operator holds the assets and charges maker and taker fees.
• Crypto broker or app. The provider quotes a price and trades against the customer or routes the order; costs are often hidden in the spread.
• Decentralized exchange (DEX). Trading runs through smart contracts directly from a customer’s own wallet. There is no operator holding funds, but also no one to turn to when something goes wrong, and errors in the contract code can cause losses.

The EU license under MiCA

The EU regulation on markets in crypto-assets (MiCA) has applied in full since 30 December 2024. Firms that exchange, hold or trade crypto-assets for customers need an authorization as a crypto-asset service provider (CASP). Transitional periods for firms already active under national rules ran out by 1 July 2026 at the latest. An authorized provider may serve customers in all EU countries.

The license brings duties that matter to customers: customer assets must be kept separate from the company’s own assets, conflicts of interest must be managed, and complaints must be handled. ESMA publishes a register of authorized providers, and national supervisors such as BaFin list the firms they supervise. A provider outside the EU that actively targets EU customers without a license is not covered by these protections.

MiCA does not make crypto-assets safe. Price swings of 50 % or more have happened repeatedly, and no deposit guarantee covers coins held at an exchange.

Custody risk

When coins sit at an exchange, the customer holds a claim against the company, not the coins themselves. The collapse of the exchange FTX in November 2022 showed what that means: customer funds had been used elsewhere, and withdrawals stopped overnight. Segregation rules under MiCA reduce this risk, and some exchanges publish “proof of reserves”. Such reports show assets at a point in time, but they rarely show the liabilities on the other side, so they are not a full audit.

Moving coins into a wallet under one’s own control removes the exchange risk and replaces it with the risk of losing access; the page on crypto wallets covers that trade-off.

Fees

• Trading fees. Maker and taker fees as a percentage of the trade, often lower for high volumes.
• Spread. Especially at brokers and apps that advertise “no fees”, the cost sits in the gap between buy and sell price.
• Deposits and withdrawals. Card payments and bank transfers can cost extra; withdrawing coins carries a network fee that varies with the blockchain and its load.
• Staking and savings products. The advertised yield is usually variable, and the exchange keeps a share.

Taxes in Germany

Gains from selling cryptocurrencies held privately count as private sales transactions under section 23 of the German Income Tax Act. After a holding period of more than one year, gains are tax-free. Within one year they are taxed at the personal income tax rate if total gains from such transactions reach 1,000 euros in the calendar year; below that limit they stay tax-free. Exchanging one coin for another counts as a sale. The rules differ in other countries.