8 REASONS TO RUN YOUR OWN CRYPTO EXCHANGE BUSINESS – CryptoKiNews
Cryptocurrencies and cryptocurrency trading are no longer exotic phenomena. Even most conservative governments are beginning to realize that Bitcoin and its descendants will inevitably impact the economy of the future in one way or another. More and more laws focus on allowing cryptocurrencies and blockchain technology more freedom of application.
Despite the volatility of the major coins, the crypto-market is expanding, granting enthusiasts a space to develop the cryptocurrency industry or simply to profit. The easiest way to make money on cryptocurrencies is to invest in any coin of your choice and speculate on volatility.
That said, traders and investors will continue making money or losing it — crypto exchanges will win either way.
On one condition. Winning is only possible if the exchange founders take into account every possible nuance, whether technical, legal, or user-oriented.
If you’re looking to start up your own Bitcoin exchange business, this step by step guide will point you in the right direction.
1. Do Your Research
When it comes to cryptocurrencies and exchanges, reputation counts. Before you even go so far as to create an account (which should reflect a high level of trust, as it entails a user passing over private information of various types), take time to thoroughly research the exchange you’re considering. What do other users say about the exchange?
2. Choosing the regulation
Investing in cryptocurrencies and tokenization of assets is a trend that is unlikely to disappear in the foreseeable future, so regulation and government control over the field will probably continue expanding. Therefore, anyone who asks a question like “How to start a bitcoin exchange business?” should also think about the jurisdiction their platform will operate in.
The choice of jurisdiction to start a crypto exchange determines the laws and trends, which include taxation, accounting, and business management. In different regions, the regulation conditions can vary greatly, from a clear set of regulations to the prohibition or complete lack of regulation. And while the latter option may seem attractive at first glance, remember that sooner or later this legislative void may be filled, and not necessarily in favor of your business, whether you intend to create an altcoin exchange or start a Bitcoin business with global ambitions.
For instance, Malta, Gibraltar, Switzerland, and Singapore are distinguished as attractive countries for those wishing to open a cryptocurrency exchange. However, legislation tends to change, so it is necessary to keep abreast of relevant developments.
The issue of integrating a payment system into your exchange is also related to jurisdiction. Any crypto exchange must have a set of tools to enable exchanging cryptocurrencies into fiat currency to generate revenue, so it is necessary to find out in advance which banks you can cooperate with to provide funds withdrawal and depositing.
3. Obtain legal counsel to ensure licensing requirements are met.
Before you set your plan into action, it is important to seek legal counsel to understand the regulatory demands of your new venture. Proper licensing will need to be obtained in all jurisdictions in which the company plans to operate. In many places, cryptocurrency exchanges operate without significant oversight, as government and regulation have not yet caught up with technology, while in other places including the US, Bitcoin operators must be licensed Money Transmitter businesses and must follow SEC and CFTC rules and regulations among others. Proper legal counsel is a must. It is typical that exchanges, because they fall into the currency exchange umbrella, must adhere to Know Your Customer (KYC) regulations, which have become more and more prevalent to combat money laundering. In the United States, for example, these rules have been in place since 2002 as a result of the Patriot Act. Regulations vary by jurisdiction, so be sure to consult with an attorney familiar with the industry.
4. Choosing the type of exchange
Choosing the type of exchange is the first and very important decision you have to make on the way to create a crypto exchange platform. Your next steps, including licensing, choosing the software, hiring specialists, and interacting with commercial entities, depend on this call.
There are three ways to set up a crypto exchange process — centralized, decentralized, and hybrid. Correspondingly, there are three types of crypto exchanges — centralized (hereinbelow CEX), decentralized (hereinbelow DEX), and hybrid exchanges.
5. Design the Architecture of the Exchange
- After picking up the type of crypto exchange, you need to properly design the architecture of your crypto trading platform.
- To design a perfect architecture, you need to enable four important components. Such as a Trade engine, multi-cryptocurrency wallet, admin control panel, and effective user-friendly interface.
6. Implement best security practices.
Exchanges built with Modulus technology are among the most secure in the world, utilizing offline cold storage wallets, two factor authentication and encrypted databases. Also Modulus technology does not store passwords (only hashes). We have written extensively about the data breeches which have become infamous within the industry, including Mt. Gox and Bithumb. The bottom line? Cryptocurrencies have become a ripe target for cybercrime and hacking, leaving exchanges scrambling to differentiate based on security.
7. Define your target audience
Consider how wide your TA reach should be – you may be restricted by your country and its jurisdiction, but it’s a completely different case when you’re planning to globalize your business from the get-go. In the latter situation, you’ll need to take care of all the necessary international licenses and permissions according to locations where you plan to present your exchange business. Either way, you’ll need an assistance of a lawyer with experience of handling international laws of exchange.
8.Establish a partnership with a reliable bank
To operate fiat money, you will inevitably deal with a bank or payment provider. So it is very important to choose a reliable bank with a sufficient number of online facilities, partner-friendly conditions, and more or less substantial exchange rates. It is better to establish your connections in the countries where cryptocurrency is adopted as a regular means of payment, such as the USA or Scandinavian countries.
Summary:
By considering all these essential factors, you can create cryptocurrency exchange platform. All you need to do is get the bug-free and customizable script from the reputed crypto exchange script provider. So that you can quickly start a flourishing crypto exchange business as per your business requirements in a hassle-free manner.
Author: admin