How Do Crypto Exchanges Differ From Online Brokerages?

Crypto Exchanges

More and more people today are getting into trading cryptocurrencies. According to an investment survey back in April in fact, about 14% of Americans currently own cryptocurrency — and that’s to say nothing of the broader international community. The crypto world has evolved into a popular, growing asset class, and as a result there are new people every day making accounts on cryptocurrency exchanges in order to start trading and — hopefully — profiting.

For people taking this step though, it’s important to recognize how crypto exchanges still differ from the online brokerages that have long facilitated more traditional stock and asset trading. This will lead to a better understanding of how crypto trading works, and it’s why we’re taking the time to cover a few distinct differences between the two methods and markets.

Financial Advice

Perhaps the main difference between the two options is that a brokerage company will often offer traders the option of professional financial advice. These are professional services through which people can trade alone, but can also tap into expertise if they so desire. Crypto exchanges, by contrast, leave traders on their own. That doesn’t mean sound crypto investing advice can’t be found elsewhere, but the exchanges themselves are, for the most part, pure trading environments

Getting Started

Another key difference is how traders get started at each respective platform. Crypto exchanges involve minimal setup. One has to make a basic account and sometimes prove identity and link a bank account in order to make deposits. From that point forward, trading can commence — typically with no minimum amount enforced (meaning in theory one can start buying cryptocurrency with $1). Online stock brokerages today are not a whole lot more involved, but there can be a little bit more of an application process. Additionally, some platforms do enforce minimum deposit or trade amounts — though these are lower today than they might have been in the past.

Listing Consistency

When comparing different crypto exchanges in the past, we mentioned that one (Binance) had a “massive range of coins” compared to the other (Kraken), which had an extensive but not as massive range. Similarly, today, Robinhood (an increasingly popular option for crypto traders) has relatively few tradable coins compared to, say, Coinbase (perhaps the most well-known exchange). These differences and inconsistencies are less common where stock brokerages are concerned. Typically, different professional brokerages will offer access to the same markets and assets, which removes one variable when choosing between services.


The remaining factor that really defines the difference between crypto exchanges and ordinary trading brokerages is that of asset ownership. Opportunities to spend cryptocurrency are becoming more prevalent, and when you invest in cryptos you have the option of keeping them in a digital wallet and spending them in the real world. This is a stark contrast to the brokerage setup, wherein an investment merely constitutes a small piece of equity in a company, or a stored (but not practically useful) quantity of a given commodity.

Ultimately, cryptocurrency and stock trading are simply two different practices. But understanding the distinctions in trading methods will benefit crypto traders, particularly if they have experience working through traditional brokerages and are transitioning to crypto exchanges.