Cryptocurrencies like Bitcoin, Litecoin, Ethereum, etc., are the best sources for investment. Nowadays, digital currencies are famous due to high volatility, improved liquidity, exposure of leverage, security, and much more. Many people have started investing in cryptocurrencies to get a steep rise in their invested money.
If you are an investor, it can be extremely beneficial to start a Bitcoin Exchange business. Get enough information before initiating the cryptocurrency exchange business. Follow specific steps to begin your business. Go through all the steps in detail.
1. Start by Deciding the Targeted Place
It is crucial to decide the targeted location where you will start your business. You have to consider whether you will operate locally or worldwide. According to the location, you have to take certain approvals, licensing, legalized documents, etc., to kickstart your business. Every place has different rules and regulations regarding the bitcoin exchange business.
2. Get Legal Counsel to satisfy the licensing Needs
Legal counsel is necessary to understand the laws and regulatory demands of the new business. Before taking your step forward, consider legal counsel as a crucial step. The company requires proper licensing with all jurisdictions to operate the plan. There are many places where digital currencies are used without massive oversight.
In places like the US, Bitcoin operators must have a license of operating Money Transmitter businesses. The company must follow CFTC and SEC rules and regulations. The KYC (Know Your Customer) regulations are quite relevant to battle money laundering. Therefore, every place has different laws, and you need to consult before starting the business.
3. Cost Estimation to Start the Venture
Cost estimation is necessary when you decide to start a business. You should know the approximate costs required for launching a cryptocurrency exchange platform. Calculate the cost of hosting, technology, legal counsel, documentation, registration, and initial advertising. Make sure that you have enough capital to make your venture smooth.
Ignoring future consequences can be a big mistake by startups. You should plan considering all the ups and downs that you can face in your business. Your company must be licensed to operate a crypto exchange by charging ongoing fees. Make sure that you maintain the cost for licensing and registration separately.
4. Get a Technology Solution Provider
You can get different cryptocurrency exchange providers with all the customizations and functionalities at a one-time cost. They can provide technology at loyal rates. The client can easily host the ready-made platforms because they have access to complete source code. The entire code is necessary for auditing, regulators that inspect code, etc.
Consider companies to get technology solutions for your business with all the features, including backend technology. Make sure that you get a White label along with an exchange application and source code. It helps in making changes in the customizable exchange platform. It also decreases development time and project costs.
5. Connect Your Exchange Platform with Others
You have to consider a factor, known as liquidity. There is no need for trading activity, and order books to connect your customers with your business. A solution to this issue is simulating dummy accounts within the exchange platform.
Your exchange can be interconnected with a network of other exchanges. It will enhance liquidity. Make sure that the network should not be large enough because it leads to less liquidity for the new exchange platform.
6. Payment Processors
There are different payment processors with different fee structures. Your exchange business requires a low transaction rate to compete with existing exchange platforms. You have to find effective payment processors and sign a contract with them smartly.
Other major differences between payment processors are compliance with DSS and PCI, cybersecurity, and settlement time. Make sure that you sign with a PCI-compliant payment processor to protect your new venture against cyberattacks.
7. Implementation of Security
The exchanges must be secure, and it should have features like offline cold storage wallets, encrypted databases, two-factor authentication, etc. All the customers pursue your exchange platform if they get enough security to invest their money. Make sure that the exchange does not save the passwords of customers.
In recent decades, the crypto industry had suffered from data breaches. Cryptocurrencies are prone to cybercrimes, and hacking, which leads to exchange scrambling. Therefore, you should not compromise with the security factor.
8. Make Your Exchange Business After Beta Testing
After finalizing and developing all the pillars of exchange platforms, you have to beta test the entire capabilities. You have taken so much pain to start your business, and it is a must that you do not want to ruin your hard work. You should ensure all the aspects of the exchange business before making it live.
9. Marketing and PR Campaigns
After launching your exchange business, you can market it by news outlets like VentsMagazine.com and many more. You can plan your marketing campaigns and other activities by also considering the cost. All the marketing activities require funds, and you need to make a proper marketing budget. You should focus on social media platforms to introduce and market your business.
10. Customer Support
After introducing and connecting your business with customers, you need to determine your business’s long-term success. If any customer faces any issues, you must have a robust customer support team to deal with them. Better customer support will let your customers stick to your exchange platform. Do not ignore them to achieve long-term success. You can also plan for a ticketing system with helpful and knowledgeable staff. They should be available 24×7 to help your customers.
11. Get a Legal Team for Ongoing and Future Compliance
It is necessary to maintain legal compliance. You must follow all the rules and regulations according to the local and foreign jurisdictions. If you do so, then you traders or members can easily trade from your exchange. The laws on digital currencies are continuously evolving, and it is necessary to hire a legal compliance team to update and do the needful.
The Bottom Line
It will be helpful if you follow the complete guide to start a Bitcoin Exchange business. You should invest your time in understanding your exchange business, laws, budget, and much more. If you follow all the rules and regulations, then nobody can stop your business and long-term success. Now, it depends on you how to grow and organize your Bitcoin Exchange business.