A Review of Crypto-Trading Infrastructure

Abstract

The paper offers a snapshot of the evolution of crypto-trading platforms across different jurisdictions and reports the exchanges’ engagement with these developments and their views on the future opportunities or challenges that these new technologies bring. It also provides an overview of the setup and operation of crypto-trading platforms, contrasting the models of centralised platforms (CEXs) with those of the decentralised platforms (DEXs) and studies the implications that the differences in model design between DEX and CEX have on liquidity provision, price discovery and the custody of assets. The paper reviews the academic literature findings about the market microstructure of these platforms. In addition, it discusses what these differences may imply in terms of three fundamental aspects of financial markets regulation: anti-money laundering, prudential regulation and financial stability, and investor protection.

Keywords: Crypto-trading, CEX, DEX, DeFi

JEL Classification: G10, G18