The idea of CEX and DEX integration is becoming a reality every day. According to Kraken Co-CEO Arjun Sethi, the two models aren’t opposites anymore. Instead, he believes they’re just different ways of coordinating the same basic function in crypto.
In his view, CEX and DEX integration isn’t a distant theory; it’s already happening.
Why CEXs and DEXs Are No Longer Opposites
In an October 30 interview on PondTalk with Blew, Sethi said centralised exchanges offer deep liquidity. He added that they also provide strong compliance systems. He added that they also provide polished user experiences. Meanwhile, decentralised exchanges shine at permissionless execution and smart-contract-based innovation.
Arjun Sethi: CEXs and DEXs Will Ultimately Converge
On October 30, Kraken Co-CEO Arjun Sethi said in an interview on PondTalk with Blew that CEXs and DEXs are no longer opposing paradigms, but rather different expressions of the same coordination function. He outlined three… pic.twitter.com/s1rKtULNgl
— Wu Blockchain (@WuBlockchain) December 1, 2025
He says they’re no longer competing models but “different expressions of the same coordination function.” The gap between them is shrinking, which fuels the broader trend of CEX-DEX integration.
The Three Phases of Crypto Trading
Sethi divided the history of trading into three main stages:
– Phase One: The Custody Era
This was the early era dominated by centralised exchanges. They controlled custody, liquidity, onboarding rails, and KYC. They provided trust and reliability, and people could depend on them.
– Phase Two: The Smart-Contract Era
DEXs introduced AMMs, composability, and on-chain settlement. Users got access without permission, and innovation was faster than ever. This phase showed that trading didn’t need to depend on custodial models.
– Phase Three: The Hybrid Era (Right Now)
According to Sethi, the industry is shifting into a hybrid era. It is where unified liquidity, compliance bridges, and on-chain identity systems begin to blend CEX and DEX strengths. This phase opens the door to increased capital efficiency. It opens up the framework of a self-regulating market.
The future of financial infrastructure will be built through collaboration, not control.
Next Monday, I will join the @SECGov and @CFTC roundtable on tokenization and regulatory harmonization.
From tokenized equities, we have already seen more than 4.3B in combined CEX and DEX… https://t.co/2LDUWujdqN
— Arjun Sethi (@arjunsethi) September 24, 2025
Sethi says DEXs will keep improving their user experience until they feel more like centralised platforms. CEXs will shift toward more on-chain transparency, stronger reserve proofs, and AI-driven compliance. This cross-adoption enables CEXs and DEXs to integrate and serve a variety of users and institutions.
Conclusion
Sethi sees CEX and DEX integration creating a self-regulating market. In this model, traders, institutions, and protocols share liquidity rather than custody. He argues that centralisation and decentralisation aren’t ideologies; they’re optimisation choices.
Disclaimer
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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