What is the difference between a crypto exchange and a broker?

Both let you turn euros into crypto, and many people use the words interchangeably. Under the bonnet, though, they work in opposite ways, and that affects how the price you pay is formed.

How an exchange works

An exchange runs an order book: a live list of everyone who wants to buy or sell a coin and at what price. When you place an order, the exchange matches it with the best opposite order. You trade with other users, and the exchange charges a fee for the match, often lower for orders that add liquidity (maker) than for those that take it (taker). Kraken Pro and Coinbase Advanced are examples of such trading screens. The order types you can use there are explained in what a limit order is.

How a broker works

A broker sells to you from its own inventory or sources the coins elsewhere, at a price it quotes. You see one buy price and one sell price, without an order book. The convenience is real: you press a button and the trade is done. The cost is mostly hidden in the gap between the quoted price and the market, called the spread. In our comparison, Bitpanda works as a broker.

And the simple apps of exchanges?

Most exchanges offer both. Their easy buy button behaves like a broker: a quoted price with a margin included. Their advanced screen gives you the order book. The same platform can therefore be cheap or expensive depending on which part of the app you use. Several exchanges do not publish the margin in their buy button, which is why our comparer can show results for both modes.

Does regulation differ?

Under MiCA, operating a trading platform and executing orders for clients are separate licensed services, but both require authorisation as a crypto-asset service provider, with rules on safeguarding client assets, conflicts of interest and complaints. ESMA's register shows which services each firm is licensed for; our list of MiCA-licensed exchanges summarises it for the platforms we compare.

Which is cheaper?

It depends on the coin, the amount and how you pay. A broker can beat an exchange's simple app; an exchange's advanced screen often beats both for larger amounts. The only reliable answer comes from comparing what you actually receive. Our comparer does that for licensed platforms, in simple-app and advanced mode, and the reasons prices diverge are covered in why crypto prices differ between exchanges. For the overall picture, see the best crypto exchange in Europe, or open a fee page such as Kraken fees.