Are users shifting to DEXs?

How many users are abandoning centralised exchanges (CEXs), and can decentralised rivals (DEXs) seize the initiative? Fedor Ivanov, director of analytics at Shard, shares his view with ForkLog readers.

How US and EU pressure affects exchanges

Crypto exchanges have long been seen as analogues of traditional financial institutions, chiefly banks. Regulators, however, are only now stepping up oversight, and their demands remain far from clear to the market.

The most familiar headache is the American debate over whether various digital assets are securities. On the one hand, US regulators have not drafted bespoke listing rules for cryptoassets on exchanges. On the other, they fine platforms for securities-law violations.

In 2023 alone the SEC launched more than 40 crypto-related actions, including lawsuits against Coinbase, Kraken and Binance. In 2024, major platforms Crypto.com and KuCoin joined that list.

The CFTC kept pace, repeatedly bringing claims tied to trading in commodity futures—an umbrella it believes covers some crypto exchange products.

Binance ended up paying record penalties over derivatives-related violations, KuCoin agreed to a fine of nearly $300m, BitMEX paid $100m, and Bittrex left the market altogether.

The second source of pressure is anti-money-laundering and counter-terrorist financing (AML). All exchanges in regulated jurisdictions must follow AML/KYC procedures, yet regulators are not always convinced crypto platforms meet these obligations.

In the EU, where MiCA is in force and the AMLA operates, the industry warns of overregulation. Even so, global exchanges prefer adapting to new demands rather than retreating from Europe. They implement the FATF Travel Rule, delist contentious tokens and obtain licences in every jurisdiction where they operate—but they do not shut down.

Why big platforms are losing users

Despite these headwinds, trading volumes on centralised platforms continue to grow. This reflects rising numbers of active users, new product launches, higher prices for leading cryptocurrencies and a better regulatory climate in some regions.

At the same time, dissatisfaction with CEXs is growing. Large exchanges are losing trust for several reasons:

• the centralisation of decentralised finance and regulatory pressure. Users feel they have ended up in the same sort of institution as a bank. There is no anonymity or freedom—and there is nostalgia for when there was.

• a high share of loss-making tokens after listing. Since the start of 2025, roughly 90% of newly listed assets have lost money for holders, eroding trust in exchange vetting. Scandals over listings, accusations that revenues trump project quality, and troubles with stablecoins losing stability tarnish the industry’s reputation—and CEXs’ in particular;
• hacks and large thefts. Attacks like the one faced by Bybit heighten security concerns.

The result is that some clients consider moving to alternative venues or DEXs. For now, though, they remain a minority and CEXs stay the dominant force.

Will DEXs save the market

The DEX market is far smaller than CEXs—and is likely to remain so. There are many reasons, technical and regulatory.

First, using a DEX is more complex and entails technical risks, from smart-contract vulnerabilities to user errors when connecting a wallet or placing a swap.

Second, DEXs may be even more exposed to hacks than CEXs. According to Shard, losses from DEX hacks exceeded $200m in 2024, and the number of attacks rose. There is growing use of bridges to convert stolen tokens into more liquid, widely used assets such as BNB, ETH and USDT.

Cross-chain bridges themselves became juicier targets in 2024, as they often control large sums. Losses can run into millions of dollars, as with Alex Labs ($4.3m) and Socket ($3.3m).

On top of that, DEXs are also in regulators’ sights. The EU plans to craft rules for DEXs by 2026, and in 2024 the US even passed a law obliging them to report user activity. After Donald Trump took office, that rule was repealed.

Can CEXs adapt to new demands

DEXs will not replace centralised platforms. Regulation also means investor protection, clarity about whom to hold accountable and, ultimately, the safeguarding of funds.

The numbers speak for themselves: daily volumes on CEXs reach $30–70bn, while DEXs manage only a few billion. Centralised exchanges also bundle a range of financial services—various derivatives, deposits and lending—in a simple interface. DEXs cannot match that breadth.

Finally, crypto is treated as truly “clean” only if it comes from a regulated centralised exchange. Not every platform is willing to accept assets from DEXs, fearing they may be used to launder proceeds of hacks.

Conclusions

Regulatory changes tend to reduce the availability of crypto services, but most players are now prepared. The EU offers a case in point: exchanges meet MiCA’s stringent demands and anti-money-laundering rules.

Within the bloc, the Travel Rule limits deposits from certain services. Business has not died—and does not plan to. Users remain with the exchanges they know.