A centralized finance (CeFi) system is one where a financial institution is governed by a single governing authority. CeFi institutions include the vast majority of banks and exchanges. CeFi institutions are middlemen that clients rely on to conduct financial transactions and secure assets. Know-Your-Customer and anti-money-laundering regulations must also be followed by CeFi organizations. Despite the fact that cryptocurrencies operate on decentralized blockchains, many cryptocurrency exchanges are CeFi. They demand that users show identification and provide control of their private keys. When compared to decentralized exchanges, CeFi crypto exchanges have a much more manageable trading experience. They are, however, more likely to be subject to government rules and are more vulnerable to cyberattacks and market manipulation.
