Crypto Exchanges vs Brokers

A cryptocurrency broker and a cryptocurrency exchange are two fundamentally different concepts. Both platforms allow you to trade cryptocurrencies, but the broker offers indirect trading, acting as an intermediary between the trader and the market. Crypto exchange also acts as an intermediary, but between traders.

There are many differences between a crypto broker and a crypto exchange. It cannot be said that one option is better than the other, but in certain situations it is more profitable to choose a site of a particular type. To understand which platform – a broker or an exchange – is best for you, you need to find out how they differ, and what advantages and features they have.

What Is a Cryptocurrency Broker?

In fact, a cryptocurrency broker is a conventional term, because we are talking about a traditional forex broker that provides access to the international market for cryptocurrency trading. That is, cryptocurrency is not a priority for such platforms. It is only one of several groups of instruments along with fiat trading, currency indices, options, etc.

As a rule, a crypto broker offers two options for earning on cryptocurrency – deals on fluctuations in rates and investing. The most demanded are deals on fluctuations in exchange rates. Trading is not carried out directly with cryptocurrencies, but with contracts such as CFDs. CFD is a contract for difference between a buyer and a seller. The subject of the contract is the difference in the value of the target asset at the time of bargaining and at the time of a trade settlement.

It may seem that a CFD is similar to a contract for the delivery of goods, but there is a difference – in a CFD, the seller does not necessarily own the asset itself, and therefore the buyer cannot claim it. If the price of an asset has increased from the moment a position is opened to the moment it is closed, the seller pays the difference to the buyer. If the price falls, the difference is paid by the buyer to the seller.

An example of a cryptocurrency CFD is a BTC/USD CFD. The average spread is 320-450 pips and the average daily volatility is 4.5-4.6%. The volatility of this instrument exceeds the volatility of major currency pairs, but it has lower liquidity. Let us summarize the advantages and disadvantages of a cryptocurrency broker.

Advantages

There are many other instruments besides cryptocurrency CFDs;
There are many ways to deposit and withdraw funds, including bank cards;
As a rule, there are copy transactions or similar services;
The activity of a crypto broker is regulated at the international level;
There is always comprehensive technical support, including a call center.

Disadvantages

There is no direct cryptocurrency trading;
Few cryptocurrency pairs for contracts.

What Is a Cryptocurrency Exchange?

A cryptocurrency exchange differs from a cryptocurrency broker primarily in its focus – these platforms prioritize crypto trading and do not offer their clients other tools besides trading crypto-crypto and crypto-fiat pairs. This is direct trading, not CFD trading. That is, in relation to the BTC/USD pair from the above example, you do not get the difference between the Bitcoin rates against the US dollar fixed at different times, but sell Bitcoin for the US dollar and earn due to the fact that you bought Bitcoin cheaper earlier.

A crypto exchange has a much larger selection of cryptocurrencies than a crypto broker. Replenishment is possible in both fiat and cryptocurrency. It is another difference, because brokers, as a rule, have fiat accounts, sometimes it is possible to store savings in precious metals. You can transfer cryptocurrency to your account from other electronic wallets and, accordingly, back. Of the additional tools, cryptocurrency exchanges sometimes offer DeFi tokens, futures, options on Bitcoin, NFTs.

Let us summarize the advantages and disadvantages of crypto exchanges.

Advantages

A large selection of cryptocurrencies and tokens (the pool is much wider than that of any broker, often permanently replenished through an open listing);
Direct cryptocurrency trading – the trader does not receive the price difference in fiat currency, but sells/buys one cryptocurrency for another (or for fiat);
Although crypto exchanges are focused on direct crypto trading, they offer many related tools, for example, futures trading, there are options also;
Many exchanges are introducing utility tokens that allow lower fees, and there are other ways to reduce fees.

Disadvantages

There are no other instruments besides cryptocurrencies and their derivatives;
Exchanges in most cases are not regulated by law.

Cryptocurrency Brokers & Crypto Exchanges – Features Comparison

To compare the advantages and disadvantages of cryptocurrency brokers and crypto exchanges, let us take as an example RoboForex and Binance. These are not only the best, but also typical representatives of their segments, so it is advisable to correlate their capabilities and functionality in order to understand the difference in specific situations.

Crypto brokers or crypto exchanges – the choice of trading instruments

Cryptocurrency brokers offer indirect trading in cryptocurrencies, the bulk of their trading is traditional fiat pairs (for example, EUR/GBP, EUR/USD, USD/JPY, etc.). It is also often possible to trade shares of large companies, for example, RoboForex allows you to trade shares of Apple, Amazon, Facebook, Netflix.

Another option for trading with crypto brokers is trading with indices, these are instruments formed by groups of securities and reflecting changes in their value. The most famous is the Dow Jones Industrial Average.

RoboForex and other leading brokers provide trading in commodities (sugar, wheat), precious metals (gold, silver), energy resources (oil, coal). Some of the directions are more liquid, others are less. The success of trading largely depends on the current market and the trader's strategy. An objectively good crypto broker, in addition to cryptocurrencies, allows you to trade almost everything that has value in the global financial market.

With cryptocurrency exchanges, the situation is different. Many people register on these sites in order to buy cryptocurrency and after some time sell it at a better rate. This is a popular type of investment in crypto assets. However, the real possibilities of crypto exchanges are much wider.

For example, Binance has a conversion facility – a simple exchange of one cryptocurrency for another at the exchange rate. There is a classic and advanced trading on crypto-crypto and crypto-fiat pairs directly. Besides the traditional spot trading, Binance offers margin trading with leverage (by the way, many forex brokers also provide leverage, but this is very rare for crypto exchanges).

Binance, like many leading crypto exchanges, also has P2P trading – this is the exchange of cryptocurrencies between site users on their own terms. Also, exchanges sometimes have derivatives trading. In particular, Binance offers trading in USDT and BUSD with settlements in USDT and BUSD (USD-M type) and with settlements in cryptocurrencies (COIN-M type).

Thus, although crypto exchanges work strictly with cryptocurrencies and their derivatives, they provide an extensive selection of tools related to cryptocurrency assets. Please note that many crypto exchanges support currency accounts, meaning you can deposit both cryptocurrencies and fiats.

Cryptocurrency Exchanges or Cryptocurrency Brokers – Commissions Comparison

The vast majority of leading cryptocurrency exchanges charge a commission for cryptocurrency trading as a percentage of the transaction volume. For example, Binance has a commission of 0.1% for spot trading at the first trading level for the taker and maker. This means that regardless of the type of transaction, you will pay the exchange 0.1% of its volume. Thus, providing the exchange with direct income from your trading.

There is also a fee for withdrawing funds. It is a fixed amount, and does not depend on the withdrawal amount. For example, you withdraw BTCs and pay the exchange a fixed 0.0000048 BTC, no matter how much you withdraw. Often, the withdrawal fee depends on the asset, sometimes on the withdrawal channel and even the network you use. The cryptocurrency exchange explains all these details in the “Commissions” section (the name may differ, but such a section is always on the site). Withdrawal fees are in most cases the only option for fees charged by an exchange outside of trading.

Cryptocurrency brokers may also have trading commissions expressed as a percentage of the trade volume, but this is usually not the case. Most often, the spread is deducted from the client's income from the transaction – this is the difference between the highest purchase price and the lowest sale price, expressed in points (pips). The spread can be fixed (rarely) or floating, usually it depends on the tariff. For example, RoboForex has a spread of 0 pips on Prime and ECN tariffs, and from 1.3 pips on ProCent and Pro.

As an additional fee, the broker may charge a fixed commission (usually in US dollars) for each lot listed (for example, $4). Some brokers include the percentage of the trade and the spread in one total fee.

On average, crypto exchanges have lower trading fees than cryptocurrency brokers. For brokers, a lot is determined by the company's policy, tariff plan, selected assets, market conditions. For exchanges, trading commissions are more understandable even for a beginner, because they are fixed and make up a percentage of the transaction. All companies have non-trading commissions (for example, for withdrawal).

Crypto brokers or Crypto Exchanges – Replenishment and Withdrawal Methods

Cryptocurrency brokers allow you to deposit and withdraw funds in a large number of ways. RoboForex offers deposits/withdrawals via Visa and MC bank cards, bank transfers through the SEPA system, plus it also offers electronic transfers through the Skrill, Neteller, AdvCash, Perfect Money and Kasaar24 systems.

Top cryptocurrency exchanges also support deposit/withdrawal from bank cards and bank transfers. For most sites, transfers are available from almost any electronic and cryptocurrency wallets, but here you need to be careful – cryptocurrency transfers are carried out within the same network. For example, for Bitcoin, the BTC network is used, for TRON, the TRC20 network, etc. The network must be specified when making a transfer.

Cryptocurrency Exchanges or Cryptocurrency Brokers – Opening an Account

Regardless of whether you just want to buy cryptocurrency, whether you intend to actively trade or invest, you need to open an account on the site you have chosen. There are no critical differences between a crypto broker and a crypto exchange. In both cases, you need to register on the official website of the company, and then confirm your data – send scans of identification documents (additional steps are possible, for example, Binance requires a selfie with documents). Data verification may take several days, after which you get full access to the functionality of the site. Some brokers and exchanges allow you to trade without verification, but in such cases the limits are significantly reduced and the functionality is curtailed.

Regulation

In the vast majority of cases, cryptocurrency brokers are regulated by international organizations that have the right to control the activities of financial companies. This is due to the fact that the activity of brokers without regulation is essentially illegal. For example, RoboForex is regulated by IFSC Belize (Belize International Financial Services Commission), license number 000138/210. This means that the IFSC controls the financial activities of the broker and checks it for compliance with international financial laws.

As for cryptocurrency exchanges, unfortunately, not all of them are regulated. This is due to the legal specifics of exchanges, which in many countries simply need to register as a financial institution, but they do not report to anyone. This practice does not mean that an exchange without a regulator cannot be trusted, but you need to understand that such an exchange can close at any time, and you will never get your money back. In this situation, it is logical to resort to the services of market leaders. It all depends on your choice. For example, Binance, a recognized global giant, also does not have any license, but the exchange has been successfully operating for many years.

Training & Education

There are no specific differences between cryptocurrency brokers and cryptocurrency exchanges in this field. It all depends on the specific company. For example, RoboForex offers a FAQ and a number of guides for beginners in crypto trading. There are also detailed training videos, the broker regularly holds seminars and webinars, but they rarely deal specifically with cryptocurrencies, more often they are about forex, stock markets, etc.

Binance also does not leave its users face to face with the crypto market. The exchange has detailed trading guides for the most popular cryptocurrencies. This exchange has a fairly simple training system, but this is not a pattern. Some crypto exchanges have their own academies with video tutorials and detailed training plans for traders of different levels.

Passive Income

Let's start with the general points. Many crypto exchanges and crypto brokers offer passive earnings on referrals. The trader receives a personal link and places it on third-party resources. A user who registers on the exchange by clicking on this link becomes a partner (referral) of the trader and brings him profit in the form of a percentage of his trading commissions.

For example, RoboForex has several such programs. Under the VIP program, you get up to 70% of the commissions of partners of the first level and up to 10% of the commissions of partners of the second level. Binance has a one-tier program – you get up to 40% of the commissions of all your referrals. Please note that certain eligibility requirements may be required to participate in programs.

Many brokers offer investment programs, they can be of almost any kind – from direct contributions to third-party projects (the broker acts as an intermediary and guarantor) to services for copying transactions. For example, RoboForex has a CopyFX service that allows you to copy trades of other (successful) traders or their trading strategies.

Exchanges do not offer such services, they have their own investment options. The most popular are staking (available on most exchanges) and lending. In particular, Binance offers just such investment options. Some exchanges also host other investment options (such as mining) for users.

Сryptocurrency Brokers or Crypto Exchanges – Comparison Table

Parameters for comparison	Cryptocurrency broker	Crypto exchange
Minimum deposit	10$	1$
Regulation	Yes (IFSC Belize, Belize International Financial Services Commission)	Not
Number of cryptocurrencies	7 for MT4 and MT5, 16 for RTrader	340
Cryptocurrency market instruments	Cryptocurrency CFDs	Spot, margin, P2P, derivatives (including futures, options and leveraged tokens), NFTs
Non-crypto market instruments	Forex pairs with fiat, raw materials, precious metals, energy, other assets	Not
Cryptocurrency trading fees	Floating spreads from 0 pips	Up to 0.1% for spot
Methods of replenishment and withdrawal of funds	Bank cards, bank transfers, SEPA, Skrill, Neteller, AdvCash, Perfect Money, Kasaar24	Bank cards, bank transfers, any electronic and crypto wallets
Withdrawal to crypto wallet	Not	Yes
Ways of passive income	CopyFX (trade copy service), stock investment, referral program	Referral program, landing and staking, Binance Earn solution suite
Educational materials	AQ, text guides, video tutorials, seminars and webinars, analytics centers	FAQ, text guides, articles, news centers
Support languages	15 languages including English and Chinese	19 languages, but no call center

Crypto Exchange or Crypto Broker – Which One to Choose?

If you want to trade a large number of cryptocurrencies with a constant expansion of their available pool, a cryptocurrency exchange is right for you. On the exchange, in general, the system of commission fees is simpler, and the commissions for cryptocurrency trading are lower. Many crypto exchanges offer various methods to reduce commissions, as well as investment solutions for passive income (like staking). Therefore, they may also be of interest to investors.

If, in addition to cryptocurrencies, you want to trade other assets (fiat currencies, raw materials, metals, etc.), then a cryptocurrency broker is right for you, since the exchange simply does not have all these features. The broker has many times more tools. Since cryptocurrencies are traded under CFD contracts, you earn on pure speculation without even buying cryptocurrencies themselves. Leading brokers also have investment solutions, usually more than crypto exchanges. For example, they offer services for copying trades.

A cryptocurrency exchange is for those who want to trade only cryptocurrencies with minimal commissions. Trading is carried out via a PC or smartphone, the trading terminal interface is simplified as much as possible.
A cryptocurrency broker is for those who want to trade not only cryptocurrencies, but also fiat, indices, commodities and other assets. Brokers have more investment opportunities.

How to Choose a Cryptocurrency Broker

Check if the list of instruments includes cryptocurrencies and other assets that you are interested in.
Evaluate the trading volumes and popularity of the broker, check its rating, study the reviews.
Find out which organization regulates the broker.
Evaluate the available account types, a demo account would be a plus.
See what the broker's spread is, what withdrawal fees are, whether the deposit/withdrawal channels you plan to use are available.
If you are a beginner, do not choose brokers with a significant minimum deposit.

How to Choose a Cryptocurrency Exchange

See how many cryptocurrencies the crypto exchange offers, what trading pairs there are, fiat pairs will be a plus.

Evaluate what instruments the exchange provides access to – spot, margin, derivatives, P2P, etc. The more of them, the wider your possibilities.

Find out about additional services – does the exchange have landing, staking, other investment options, over-the-counter trading?

Specify what the minimum deposit is for the exchange, how simple and functional the trading terminal is, what are the trading and non-trading commissions.

Check the position of the exchange in our rating, read reviews about it, compare the exchanges you like.

Summary

Cryptocurrency brokers are fundamentally different from cryptocurrency exchanges. Brokers do not allow you to trade cryptocurrencies directly, only CFD contracts, and they always have fewer such assets in the pool. But besides cryptocurrencies, brokers have other tools – from currencies to raw materials and energy resources. Unlike exchanges, brokers are overwhelmingly regulated by reputable international organizations. Leverage and investment are presented on both types of sites.

Thus, if you want to trade only cryptocurrencies at a professional level, a crypto exchange will be your preferred option. If you are attracted to other assets in addition to cryptocurrency and you are not interested in direct trading, it is more expedient to choose a crypto broker. The type of site is always chosen based on the goals of the trader.