Todinova Azariya

Cryptocurrency exchanges are exchange markets for trading cryptocurrencies.

Exchanges are divided into two types: centralized (CEX) and decentralized (DEX). The advantage of centralized exchanges is the presence of legal regulation (in most countries), high transaction speed, the ability to transfer cryptocurrencies into real money. Among the disadvantages: cryptocurrency transactions are not registered in the blockchain, so all cryptocurrencies are on the same exchange account. The user identification procedure (KYC) is being actively introduced. If a person refuses to pass it, then his account in the crypto exchange may be frozen.

Decentralized exchanges do not have legal status, the transaction speed is much lower and there is no possibility to exchange cryptocurrencies for fiat money. However, their advantage is the record of each transaction in the blockchain and anonymity.

When creating the list, we took into account the following characteristics:

• Trading volume. This indicator is important for those who conduct a lot of transactions in a short period of time and it is important for him that his orders are bought or sold very quickly. In addition, this indicator shows the level of people's trust in a particular exchange.
• The number of trading pairs (markets). This characteristic is important for those who work with unpopular altcoins.
• Legal status and reputation. This avoids both deceptions by the exchange and prosecution by government regulators.
• Trading with fiat money and withdrawing money to other payment systems. This allows you to withdraw money to ordinary bank cards with minimal commissions.
• Availability of additional financial instruments. This increases the owner's ability to earn, store and withdraw crypto-assets.

Trading volume: ~$27.9 billion

Number of trading pairs (markets): 1643

Legal status: registered in the Cayman Islands

Fiat currencies: more than 43 (including USD, EUR, CAD)

Trading volume: ~$5 billion

Number of trading pairs (markets): 416

Legal status: UK registered

Fiat currencies: USD, EUR, GBR

Trading volume: ~$10 billion

Number of trading pairs (markets): 435

Legal status: registered in the Bahamas

Fiat currencies: 10 (including USD, EUR, GBR)

This is an electronic obligation by the monetary regulator that is used as an instrument of payment. It seems like cryptocurrency but has a few different attributes:

• Centralized issuer. The CBDC can’t be earned by mining or staking like usual cryptocurrencies. Only the national regulator (usually it is the central bank of government) can issue new digital coins.
• Legal status. The CBDC is legal in the country that issued it. In the future it will be legal in other countries.

Read more about CBDC here.

Central Bank Digital Currency seems like cryptocurrency but has a few different attributes:

• Centralized issuer. The CBDC can’t be earned by mining or staking like usual cryptocurrencies. Only the national regulator (usually it is the central bank of government) can issue new digital coins.
• Legal status. The CBDC is legal in the country that issued it. In the future it will be legal in other countries.

• The fastest transactions. Digital currency may be transferred directly to the owner by the regulator without intermediaries (commercial banks)
• Reducing maintenance costs of fiat currency. The CBDC doesn’t need to create paper banknotes, transporting in countries, loading in bankomats, changing old damaged bills into new ones, etc.
• The exchange rate is provided by the economy of the government.

• Absence of anonymity. The regulator can see all transactions by every user.
• Forced payment. The regulator can take out money from your wallet as tax, fines, etc. without your permission.
• Sanctions. The government can use sanctions against companies, blocking their agreements, contracts, money transfers.

The People's Bank of China started researching CBDC in 2014. But until 2019 all research was a secret. In October 2019 Chinese president Xi Jinping has talked about a huge perspective in blockchain technology. After his speech, the bank published a press release about DCEP - chinese cryptocurrency. It's the first in the world CBDC that is close to launch for сitizens. Now the chinese CBDC is testing in a few cities.

In 2022 the Swiss National Bank successfully tested the integration of CBDC with commercial and financial institutions. In testing took part Goldman Sachs, Citi, Credit Suisse, Hypothekarbank Lenzburg and UBS. National Bank tested integrating CBDC into their bank systems, trying to transfer money between them and cross-border.

“To continue fulfilling their mandates of ensuring monetary and financial stability, central banks need to stay on top of technological change. Project Helvetia is a prime example of how to achieve this. It allowed the SNB to deepen its understanding of how the safety of central bank money could be extended to tokenized asset markets,” said Andréa M. Maechler, Member of the Governing Board, Swiss National Bank.