Definition
An online platform for buying, selling, and holding cryptocurrency, converting between dollars and digital assets for a trading fee. Assets left on an exchange sit in the platform's custody, and balances are not FDIC-insured the way bank deposits are.
Why it matters
The exchange is where most people's crypto actually lives, so platform risk is part of the investment: outages, hacks, and failures have all cost users money. Understanding custody (their keys or yours) matters as much as the price chart.
Example
An investor buys $1,000 of cryptocurrency and pays a 1% trading fee ($10). They can leave the coins in the exchange's custody for convenience or withdraw them to a personal wallet they control, trading convenience for self-custody responsibility.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.