How spot trading works on a crypto exchange
A customer deposits money or crypto-assets and places an order on a trading pair such as BTC/EUR. When the order matches, the exchange debits one balance and credits the other on its ledger at once, and the customer can withdraw the purchased asset to a wallet.
No borrowing is involved, so there is no margin and no liquidation. The exchange checks only that the account holds enough to cover the order, and places that amount on hold until the order fills or is cancelled.
Spot also names a price: the spot price is the price for delivery now, and futures prices are quoted against it.
Why spot trading comes first for a new exchange
Spot is the simplest trading product to build. It needs onboarding, wallets, a ledger, an order book or a quote engine, and fiat rails, without the risk engine that leverage requires.
In the EU, spot services in crypto-assets fall under MiCA: operating a trading platform, exchanging crypto-assets for funds or for other crypto-assets, and executing orders each need authorisation as a CASP. MiCA does not apply to crypto-assets that qualify as financial instruments as MiFID II defines them.
Spot, margin or futures?
- Margin trading
- Spot trading with borrowed funds against collateral. Gains and losses are multiplied, and the position can be liquidated.
- Futures and perpetuals
- Contracts on an asset's price, leveraged by design. The trader usually never holds the asset.
- OTC trading
- Also spot, but agreed with a dealer at a quoted price instead of through the order book.
Where Spot trading shows up in a platform
Modules that do the work
- Matching engineA low-latency order book for spot markets, with market makers and outside liquidity.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- Custody & walletsWallets on every major chain, with MPC custody from leading providers or your own keys.
- Market dataLive and historical prices for crypto, stocks and FX, from the data vendors you choose.
Platforms that need it
Guides that go deeper
- What does it cost to launch a crypto exchange?Licensing, capital, technology, liquidity and people: where the money goes when you launch an exchange, and which of those costs depends on how you build.
- MiCA checklist: launching a crypto exchange in the EUWhat the EU's Markets in Crypto-Assets Regulation asks of an exchange: authorisation, capital, governance, client assets, the trading platform rules, and the laws that sit beside it.
Where it is written
The laws and standards this page's facts come from.
General information, not legal advice: what applies to you depends on your services and your market.