Digital Assets Centralized exchanges’ Kodak moment — time to adopt a new model or stay behind

Opinion by: Ido Ben Natan, co-founder and CEO of Blockaid
Centralized exchanges (CEXs) have controlled what people can trade for years. If a token wasn’t listed on major exchanges, it didn’t exist for most users. That system worked when crypto was small. But today? It’s completely broken.

The rise of Solana-based memecoins, the popularization of projects like Pump.fun and developments in AI-driven token creation are driving the creation of millions of new tokens each month.

Exchanges have not evolved to keep up. That must change. Coinbase CEO Brian Armstrong recently weighed in on the topic, saying that exchanges must shift from an allowlist model to a blocklist model, where everything is tradeable unless flagged as a scam.

In many ways, this is the Kodak moment for CEXs. Kodak’s failure to adapt to digital photography has made it a poster child of failed strategy. Now, exchanges are faced with the same threat. The old way of doing things isn’t just slow — it’s obsolete. The real question is: What comes next?

The old model is holding exchanges back

CEXs were initially built to make crypto feel safe and familiar. They modeled their approach after traditional stock markets — carefully vetting every token before it could be listed. This system was designed to protect users and keep regulators happy. Crypto, however, does not function like the stock market.

Unlike stocks, which require months of filings and approvals before going public, anyone can create a token instantly. Exchanges simply can’t keep up. The recent launch of the TRUMP coin is a great example. It launched on Jan. 17 and immediately skyrocketed in value, but by the time it had been listed on significant CEXs, it was already past its peak.

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For exchanges, this isn’t just an efficiency problem — it’s a fight for survival. The rules they were built on don’t fit crypto’s reality anymore. To compete, they must reinvent themselves before the market leaves them behind.

CEXs shouldn’t fight DEXs

Instead of fighting to preserve outdated listing processes, exchanges should embrace the open access of DEXs while retaining the best parts of centralized trading. Users simply want to trade, regardless of whether an asset is officially “listed.” The most successful exchanges will remove the need for listings altogether. Listing tokens faster is not enough when the future is an open-access model.

This new generation of exchanges won’t just list tokens — they’ll index them in real-time. Every token created onchain will be automatically recognized, with exchanges sourcing liquidity and price feeds directly from decentralized exchanges (DEXs). Instead of waiting for manual approvals, users will have access to any asset the moment it exists.

Access alone isn’t enough — trading has to be seamless. Future exchanges will integrate onchain execution and embedded self-custody wallets, enabling users to purchase tokens just as easily as they do today. Features like magic spend will enable exchanges to fund self-custodial accounts on demand, converting fiat into the required onchain currency, routing trades through the best available liquidity and securing assets without users needing to manage private keys or interact with multiple platforms.

Nothing will change from the user’s perspective — but everything will be different. A trader will simply click “buy,” and the exchange will handle everything in the background. They won’t know if the token was ever “listed” in the traditional sense — they wouldn’t need to know.

The biggest roadblock is security

Shifting from an allowlist to a blocklist is the first step toward a more open-access model for CEXs. Rather than deciding which tokens users can trade, exchanges would only block scams or malicious assets. While this shift makes trading more efficient, it also presents significant security and compliance challenges. Threats will constantly test the system, and effective protections must be implemented.


Regulators expect CEXs to enforce compliance more strictly than DEXs. Removing manual listing will require real-time monitoring to halt transactions involving high-risk assets or illicit activity. Security cannot be reactive; it must be proactive, near-instant and automated. Open-access trading may be too risky for users and exchanges without this foundation.

The future is open

The way CEXs operate today isn’t built for the future. A manual approval process for token listings doesn’t scale, and as DEXs continue to gain ground, the old model is becoming a competitive disadvantage.

The logical next step is moving to a blocklist model, where all tokens are tradable by default except those flagged as malicious or non-compliant. To survive, CEXs should work to replace slow, manual reviews with real-time threat detection, onchain security monitoring and compliance automation.

The exchanges that get this transition right — the ones that integrate security at the core of an open-access model — will lead the next era of crypto. The ones that don’t? They’ll be left trying to compete with DEXs while still using a system that no longer fits the market.

Opinion by: Ido Ben Natan, co-founder and CEO of Blockaid.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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