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"Not your keys, not your coins": the self-custody ethos
A common saying in crypto is "not your keys, not your coins." Leaving funds on an exchange is convenient for trading, but it means the exchange — not you — controls the keys. Many long-term holders buy on a CEX, then withdraw to their own wallet (see the Wallets unit).
This unit explains how exchanges work. It does not recommend any specific exchange, coin, or trading strategy. Trading crypto is risky and you can lose money.
Choosing a venue: the due-diligence checklist
For organizations, selecting a trading or custody venue is a vendor-risk decision, not just a trading one. Reasonable due-diligence questions include:
- Regulatory status — is the venue licensed in your jurisdiction(s), and by which regulators?
- Custody — does it use a qualified custodian with segregated client assets, or commingle them?
- Audits & attestations — are reserves independently audited, and how often?
- Insurance — is there crime/loss coverage, and what does it exclude?
- Operational controls — segregation of duties, withdrawal limits, allow-listing, incident history.
- Counterparty risk — what happens to your funds if the venue fails or enters insolvency?
Leaving funds on an exchange for convenience transfers custody (and insolvency risk) to the venue. Many organizations trade on a CEX then sweep balances to a qualified custodian or self-custodied treasury on a schedule.
Go deeper — the fine print
DEX mechanics (AMMs, liquidity pools, impermanent loss) are covered in the DeFi unit. Custody obligations and qualified custodians are covered in the Regulation unit.
Key takeaways
A one-page summary of Buying, Selling & Exchanges. Print it for quick reference.
- A CEX is a company that custodies your funds and matches orders (usually requires KYC); a DEX lets you trade from your own wallet via smart contracts.
- Order types: market (immediate), limit (set price), stop-loss (auto-sell at a floor).
- Liquidity = ease of trading without moving the price; slippage = gap between expected and executed price.
- “Not your keys, not your coins” — funds left on an exchange are an unsecured creditor claim if it fails.
- For organizations, choosing a venue is vendor due diligence: regulatory status, custody/qualified custodian, audits, insurance, segregation, counterparty risk.
Unit check
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