Do you see a cryptocurrency exchange as a prime business opportunity for you? Even better, have you planned to establish your own exchange but do not know where to begin? What if we told you it is not as complicated as it sounds. Yes, starting your own cryptocurrency exchange is actually something you can do successfully with little expert help and direction.
Here are 6 steps to consider.
- Choosing a location and meeting legal requirements
Before starting your new business in cryptocurrency trading, you must first register and license it. This means you’ll need to choose a country with crypto-friendly laws. Most countries do not have the infrastructure to track and control crypto systems, so they put a lid on the whole thing instead.
Initially, countries such as Malta and Gibraltar were among those targeted by crypto traders because their laws were fairer.
Follow the due process to register and get a license to begin your operations. It is recommended to consider having a legal team (either on standby in-house or contracted). It will help with any compliance issues once you start operations and your crypto business grows.
- Find crypto exchange software
You’ll need to get your exchange software architecture right — it’s the core of your business operations. You can have a dedicated team of developers to design it, but if you have time constraints, a white-label solution is an ideal fallback option. Note, however, that white-label solutions offer minimal customizations.
Whichever way you go about the exchange software architecture, these are the critical concepts the best cryptocurrency exchange must never go wrong on:
- A sound exchange engine
- Intuitive user interface
- A wallet
- Secure admin control panel
- Install robust security
Security is a no-brainer. Your crypto exchange should be hack-proof. You can use robust security measures by enabling two-factor authentication and complex password keys.
You should be able to protect the privacy of your customers at all times. A security or privacy breach will not only drive away customers but also bring up non-compliance issues.
- Join a payments service provider
At one point or another, your clients will need to convert their cryptos into hard fiat currency. You should partner with a bank or any other payments processor who will provide your clients with credit or debit cards to facilitate easy withdrawals and deposits.
Consider a payment provider who will charge the lowest fees. Your customers won’t take it lightly when a huge chunk of their earnings is truncated in processing fees. Also, the global reach of your payment provider is important. This is to avoid the need for multiple payment facilitators.
Everyone looks at a new venture with a lot of skepticism. The same will happen to your exchange if customers realize you do not have an existing order history. You cannot create a liquid market because of your starting low volumes. So how do you go about achieving liquidity?
We recommend cooperating with other exchanges by copying their orders. This is a capital-intensive solution since you’ll need to pay that particular exchange every time a transaction is made.
You can also opt to create a liquid market directly on your exchange using a liquidity provider.
- Offer 24/7 customer support
Since cryptocurrency trading takes place continuously throughout the day, you will require 24/7 customer support. Ensure you provide a live chat and other contact options to address any issues your customers have at any given time. A responsive support team could be the success factor for your new venture.
Having completed these steps, put your exchange platform to the test. You can go live with beta testing and see what performs well and what needs a tune-up.
Besides, like any other business, you’ll need a marketing strategy with PR campaigns to launch a successful exchange. That said, follow this guide and you will realize it is not that difficult to initiate and manage a crypto exchange business.