DEX is the abbreviation for decentralized exchange, which is a component of decentralized finance or DeFi. (DEX's are not regulated and would not qualify as "exchanges" under U.S. securities or commodities laws.)
These trading platforms differentiate themselves from centralized cryptocurrency trading platforms by not taking custody of traders' cryptocurrency. Settlement of trades occurs between the counterparties pursuant to the smart contracts that govern the DEX.
DEXs do not qualify individuals and entities that trade on them; as a result, they can not conduct know-your-customer and other anti-money laundering checks on the business that crosses the platform.
The founder of EtherDelta, an early DEX, settled charges by the U.S. Securities and Exchange Commission (SEC) in November 2018 that EtherDelta had operated as a unregistered securities exchange. The agency said that the DEX had allowed trading of ERC-20 tokens that the agency deemed to be securities. The SEC further noted that EtherDelta used an order book and an order display website, considered normal indicia of exchanges. The smart contract used on EtherDelta permitted trading any token based on the ERC-20 standard, without excluding ones that might be deemed securities.