The core function of a centralised exchange (CEX) in the cryptocurrency ecosystem is to act as an intermediary that facilitates the buying, selling, and trading of digital assets in a secure and organised manner. Much like traditional stock exchanges, CEXs bring together buyers and sellers by maintaining an order book, matching trades, and ensuring the smooth operation of the market. They provide liquidity by pooling a large number of traders, which makes transactions faster and price discovery more efficient compared to peer-to-peer trading.

CEXs also serve as custodians, holding users’ funds and simplifying the process of entering the crypto market. Instead of manually managing private keys and blockchain interactions, users can deposit fiat or crypto into the exchange and trade instantly. This convenience is a major reason why centralised exchanges remain the most widely used platforms, especially for beginners.

Beyond trading, centralised exchanges often offer additional services such as margin trading, futures contracts, staking, lending, and fiat gateways. They also enforce Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, making them compliant with many government requirements and attractive to institutional investors.

In essence, the primary role of a CEX is to provide accessibility, liquidity, and security in the crypto ecosystem. By lowering entry barriers and offering professional trading tools, centralised exchanges have become the backbone of cryptocurrency markets, bridging traditional finance and digital assets while supporting mass adoption.