In recent years, billions have been lost due to crypto exchange hacks. Yet, centralized exchanges retain user assets, discouraging self-custody.
Reasons for Retaining User Assets
Centralized exchanges rely on custody-based models to ensure liquidity and support revenue streams. In regulated environments such as the UAE, compliance ensures safety through conversion and staking services.
The DeFi Alternative: Self-Custody and Autonomy
DeFi platforms offer complete user control and self-custody, removing third-party risks. However, DeFi faces challenges like smart contract vulnerabilities and fiat limitations.
Global Challenges for Regulated and Non-Regulated Exchanges
In the UAE, strict licensing excludes non-regulated exchanges. Globally, non-regulated platforms face regulatory pressures and trust erosion as governments enforce stricter compliance.
In the crypto world, security often conflicts with profitability. Transparent measures will help centralized exchanges balance user asset safety with profits.
