OKX CEO Draws Clear Line Between DEXs and CEXs, Saying Centralized Exchanges Must Enforce AML and User Safeguards

OKX CEO Says DEXs Are Self-Custody Tools While CEXs Must Uphold AML and User Protections

The debate over regulation and responsibility in the crypto industry is intensifying, as centralized and decentralized platforms continue to play very different roles in the digital asset ecosystem. The latest comments from OKX leadership have added fresh clarity to this divide, emphasizing that while decentralized exchanges function as self-custody tools, centralized exchanges carry clear obligations around compliance, sanctions, and user protection.

The remarks were made by Star Xu, widely known online as Star_OKX, and were later confirmed through information shared by Cointelegraph. The hokanews editorial team cited the comments as part of its broader coverage on regulation, exchange responsibility, and the evolving structure of crypto markets.

Source: XPost

Drawing a Clear Line Between DEXs and CEXs

In his remarks, the OKX CEO stressed that decentralized exchanges, or DEXs, should be understood primarily as self-custody tools. In such systems, users maintain direct control over their private keys and assets, executing trades through smart contracts rather than through an intermediary holding their funds.

Centralized exchanges, by contrast, operate custodial platforms. Users entrust their assets to the exchange, which manages wallets, order books, and settlement. Because of this custodial role, Star Xu argued, centralized exchanges must meet much higher standards when it comes to compliance, security, and consumer protection.

This distinction, he said, is often blurred in public discussions about crypto regulation, leading to confusion about accountability.

Compliance Responsibilities of Centralized Exchanges

According to OKX leadership, centralized exchanges cannot operate as neutral technology providers alone. They are financial service platforms with real-world obligations, particularly in areas such as anti-money laundering controls, sanctions enforcement, and user safeguards.

AML requirements are designed to prevent illicit finance, including money laundering and terrorist funding. Sanctions compliance ensures platforms do not facilitate transactions involving prohibited individuals or entities. User protection measures include secure custody, transparent operations, and safeguards against fraud or misuse.

Star Xu’s comments align with a growing consensus among regulators that custodial crypto platforms should be held to standards similar to those applied to traditional financial institutions.

Why DEXs Are Viewed Differently

Decentralized exchanges operate without a central authority controlling user funds. Trades are executed peer-to-peer via smart contracts, with users maintaining full custody of their assets.

Because of this structure, DEXs are often described as tools rather than intermediaries. Proponents argue that responsibility rests primarily with users, who choose how and when to interact with protocols.

However, this model also raises complex regulatory questions. While DEXs reduce custodial risk, they can make enforcement of AML and sanctions rules more challenging. This has placed them under increasing scrutiny as decentralized finance grows in scale and influence.

A Broader Industry Debate

The OKX CEO’s remarks come amid heightened regulatory attention on crypto exchanges worldwide. Governments and regulators are working to clarify how existing financial rules apply to digital asset platforms, particularly those that hold customer funds.

Some industry voices argue that applying traditional compliance frameworks too rigidly could stifle innovation. Others contend that clear rules are essential for mainstream adoption and long-term trust.

Star Xu’s position attempts to strike a balance by acknowledging the distinct nature of DEXs while affirming the responsibilities of centralized platforms.

Market Trust and User Expectations

For many users, the difference between DEXs and CEXs is not always obvious. Centralized exchanges often offer ease of use, customer support, and fiat on-ramps, making them attractive entry points for newcomers.

With that accessibility comes expectation. Users generally assume that centralized platforms will protect their assets, comply with the law, and respond effectively to security incidents.

Industry analysts note that reinforcing these obligations is crucial for maintaining trust, especially after past exchange failures that exposed weaknesses in governance and risk management.

Implications for Regulation and Policy

The distinction highlighted by OKX leadership may influence how regulators approach future policy. Rather than applying a one-size-fits-all framework, authorities could differentiate between custodial and non-custodial platforms.

Such an approach would reflect the structural realities of crypto markets while focusing regulatory oversight where consumer risk is highest. Centralized exchanges, as custodians, would remain the primary focus of compliance enforcement.

This perspective is increasingly echoed in policy discussions across major financial jurisdictions.

Media Confirmation and Reporting Context

The comments outlining the differing roles of DEXs and CEXs were confirmed by Cointelegraph and subsequently cited by hokanews. In line with standard media practice, hokanews referenced the confirmation while providing independent analysis and broader context on regulatory developments.

This method ensures accurate attribution while maintaining editorial balance.

What This Means for the Crypto Industry

As crypto markets mature, clarity around roles and responsibilities becomes more important. Distinguishing between self-custody tools and custodial platforms may help set realistic expectations for users, regulators, and industry participants.

For centralized exchanges like OKX, embracing compliance and user protection is increasingly seen not as a burden, but as a prerequisite for long-term legitimacy and growth.

For decentralized platforms, the challenge will be to demonstrate how innovation and user autonomy can coexist with broader financial safeguards.

Conclusion

The OKX CEO’s remarks draw a clear line in the ongoing debate over crypto exchange responsibility. By framing DEXs as self-custody tools and emphasizing that CEXs must uphold AML standards, sanctions compliance, and user safeguards, the comments highlight the structural differences shaping the industry.

Confirmed by Cointelegraph and cited by hokanews, the perspective reflects a broader shift toward accountability and regulatory clarity in crypto markets. As the industry evolves, such distinctions may play a key role in defining how digital finance integrates with the global financial system.