Cryptocurrency has become a real phenomenon and one of the key changes in the financial sector in recent years. This asset has excellent liquidity and is very attractive for investments. This is why many traders are thinking about how to start a cryptocurrency business. And demand drives supply. Lately, many brokers have been trying to create a crypto exchange. The number of investors is growing every year. Moreover, 2/3 of users (61%) prefer to keep money on cryptocurrency exchanges. This method provides a high level of security and reliability. But we must remember the main aspects and properties of cryptocurrency exchanges. There are different categories of platforms: centralized and decentralized.
Satoshi Nakamoto, creating Bitcoin, noted decentralization as one of the main principles of digital assets. But international laws, anti-money laundering, and the reluctance of users to work with shadow platforms dictate their terms. According to statistics, about 98% of exchanges are centralized. This allows you to protect your customers and ensure maximum transparency of transactions. Therefore, it is important to note the need to obtain a license while creating a cryptocurrency exchange. Let’s talk about the main steps in this process.
Basic Types of Licenses for Creating a Cryptocurrency Exchange
Cryptocurrencies have become very popular in the last decade. Millions of people use crypto payments systems, and large and small companies accept bitcoin payments. But it is interesting that this segment does not have a clear legislative base. Different countries are introducing different regulators in relation to cryptocurrencies. And it is important to know all these nuances if you decide to create your own crypto exchange. The first tip is to familiarize yourself with the legislation of the region and countries where you plan to do business. Consult with specialized lawyers specializing in the cryptocurrency segment.
There are Two Main types of Licenses that Allow you to Start Such a Business:
• Crypto licenses (Japan, Estonia);
• Financial licenses (China, USA).
Many countries are trying to start regulating the cryptocurrency sector and are passing laws in this regard. That is why regulators issue special licenses to provide services in certain regions. Countries and regions where there is no clear regulation of cryptocurrencies provide financial licenses to applicants.
Main Steps to Get License for Your Cryptocurrency Exchange
There is a clear and understandable procedure for obtaining special licenses. Companies expect that following the instructions will help start a crypto exchange quickly. But you need to remember that there are some aspects of each stage. We recommend enlisting the support of a specialized lawyer who knows about all the nuances of this process. This way you can avoid mistakes and make the process of starting a cryptocurrency exchange as efficient as possible.
Register a Company in the Right Region
First of all, define where you want to create cryptocurrency exchange. The company must be registered in the country, and also have the necessary authorized capital. The size of the authorized fund may be different and depends on a specific country. For example, according to Estonian law, it must be 12 thousand euros. According to the jurisdiction of Malta – 750 thousand. Also, some countries may have additional requirements for employees.
Choosing a Bank and Opening an Account
The next step in creating a crypto exchange process is opening a bank account. The site provides an opportunity for users to work with both fiat and digital currencies. And here there is a risk of hacker attacks. A bank account is a special measure that allows you to protect your users. Also, this is a mandatory requirement of the regulator. Therefore, it is important to choose a bank that accepts cryptocurrency payments, as well as offers the best conditions, and has an excellent reputation.
AML/KYC Employees
Another feature of regulated cryptocurrency exchange is legality and anti-money laundering policies. Therefore, financial regulators consider the AML (anti-money laundering) and KYC (know your client) factors. A company cannot obtain a license and start a cryptocurrency exchange without an AML/KYC employee. Therefore, it is important to hire a qualified specialist who will comply with all requirements and work efficiently. Moreover, following the AML/KYC rules will increase your rating and customer respect.
Prepare All Documentation
Each regulator provides a list of required documents for a start cryptocurrency exchange. You need to draw up a business plan, submit a risk statement, submit financial statements, etc. Moreover, the regulator may require additional documents. Such care is necessary in order to admit to the market only reliable companies offering quality services to users.
Application Submission
The last step before obtaining a license and starting a cryptocurrency business is writing an application. The broker checks all documents, consults with lawyers, revises the registration and licensing requirements. And (if everything is good and does not require edits) fills in a special form, and then sends it to the regulator. It considers all factors and issues a conclusion. The registration process can take from 2 months to a year. Remember that if you find an error, you will need to fix it.
Best Jurisdictions to Create Cryptocurrency Exchange
Choosing the best jurisdiction is an important step at the stage of creating a cryptocurrency exchange. Analysis of all legal regulations, local laws, and requirements is a prerequisite to ensure maximum efficiency. Please be aware that laws may vary from region to region. And it is important to know about all the nuances and pitfalls. We invite you to pay attention to the most popular countries and tell you how to start a crypto exchange in this region.
| Financial Regulator | Documents | Special Requirements | Terms | Prices | |
| Estonia | FSA (Financial Supervision and Resolution Authority) | detailed business plan, articles of incorporation, abstract from the national register, information about corporate accounts | Estonian resident among the governing board, an office registered in Estonia | 60 days | 12 thousand euros |
| Malta | FSA | business plan, documents of co-founders, information about corporate accounts | Maltese office, registered capital of at least 750 000 EUR | From 90 days | From 12 thousand euros |
| Japan | FSA | ID documents of the governing board members and beneficiaries, business plan, AML compliance plan | Japanese resident among top managers, a Japan-based office, registered capital of at least a million yens | From 180 days | >400000 JPY |
| Singapore | ACRA | information about a corporate account, incorporation papers, detailed business plan | At least two Singaporean residents among top managers, head managers with at least 2 years of experience, registered capital of 260 000 SGD | From 180 days | >50000 SGD |
| Great Britain | FCA | addresses of registered wallets, business plan for at least 3 years, POSOF (proof of source of funds) | UK-resident among the governing board | From 90 days | >15000 Pounds |
The process of obtaining a license can become complicated due to various pitfalls and nuances. B2Broker offers professional help for newbies. The company is an excellent liquidity provider and also offers turnkey white label FX solutions. Thanks to such cooperation, the process of obtaining a license and starting work on a cryptocurrency exchange becomes as convenient and productive as possible.