Crypto exchanges are convenient and secure places for holding their assets; that’s why 60% of traders and investors prefer to use online platforms. Meanwhile, newer business founders are still interested in creating a cryptocurrency exchange, despite rising participants. There are two types of crypto platforms: centralized and decentralized exchanges.
Digital assets mostly follow principles of decentralization. However, 98% of total trading volumes belong to centralized platforms because the cryptocurrency market is slowly legalizing. Further, the whole industry is gaining momentum now so that newcomers are not sure about protecting their rights. Forex liquidity solutions refers to a currency pair’s ability to be bought and sold without creating a major impact on its exchange rate.
If you want to start a cryptocurrency exchange, you need to get a crypto exchange license. What are the key steps to pass this procedure?
Main differences of two crypto license types
There is no precise regulation of the cryptocurrency industry in most countries. And despite rapid growth, newcomers have troubles while crypto exchange development.
This is why newer crypto exchange founders need to look through the requirements of different jurisdictions. It’s essential in the question of how to start cryptocurrency business.
There are two main types of licenses:
- crypto license (Estonia, Malta, Japan);
- financial operations license (Hong Kong, United States).
Some countries have adopted specific laws for crypto regulation; this is the reason for getting a license. In other jurisdictions, there is no clear regulation of cryptocurrencies, so that they provide newer business founders with financial licenses.
How to get a license for crypto exchange in 5 steps
Mandatory steps of getting a license seem transparent. But, in fact, there are many obstacles at every level. That’s why newcomer business owners need to ask for the help of qualified lawyers with competence in the crypto legislature.
#1. Register a company in the chosen country
Centralized cryptocurrency exchange development requires creating an operating company. Business owners must create a local bank account and deposit a specific amount of money as registered capital to register a legal entity. It depends on a chosen jurisdiction — from €12,000 (for Estonian license) to €750,000 (for Maltese license). Further, some countries have additional requirements for the core team staff.
#2. Open an account in a local bank
Crypto exchange processes transactions with a tremendous flow of funds; this is why every platform is vulnerable to hacker attacks. Trustworthy platforms have enough features to protect traders and investors. First and foremost, authorities require business founders to create an account in a local bank. Never ignore this step for getting the crypto license. Select a reliable bank with favourable conditions for cryptocurrency exchanges.
Also visit: Why You Should Switch to Direct Debit Services
#3. Hire an AML officer
Financial regulators want to protect the market from scammers. This is the reason why KYC and AML procedures are essential to start cryptocurrency business. Authorities pay specific attention to this factor; you need to hire a qualified AML officer to get a license in most countries. If the exchange complies with AML and KYC policies, traders and investors trust the exchange.
#4. Prepare the set of mandatory documents
Learn the set of documents demanded by a regulator in a specific jurisdiction. Authorities require a business plan, risk statement and other documentation to protect traders from shell companies.
#5. Submit an application
It’s the last step before getting a license for starting a cryptocurrency exchange business. After checking everything out, founders need to fill in the application and send it to the financial authority. Approval may take up to 12 months. If there are some errors, the regulator rejects the request.
How to open your own crypto exchange in trustworthy jurisdictions
The choice of country is a vital factor for the smooth operation of the cryptocurrency exchange. Different jurisdictions have unique demands, so it’s better to check all requirements. Here is the list of the most popular countries for getting a license:
Estonia
Financial authority: Financial Supervision and Resolution Authority;
Set of documents: business plan, сonstitutional documents, abstract from the national register of companies and information about corporate bank accounts;
Additional requirements: The top management must have an Estonian residence and an office registered in the Republic of Estonia.
Terms: At least 2 months;
Price: From €12,000.
Malta
Financial authority: The Malta Financial Services Authority;
Set of documents: business plan, questionnaire of the governing board, information about corporate bank accounts;
Additional requirements: Office registered in Malta, the minimum amount of the registered capital – €750,000;
Terms: At least 3 months;
Price: From €12,000.
Japan
Financial authority: The Financial Services Agency;
Set of documents: ID documentation of top management and co-founders, business plan, AML compliance certificate;
Additional requirements: Japanese residence among the governing board, Japanese office, the minimum amount of the registered capital – ¥1,000,000;
Terms: 6 months;
Price: From ¥400,000.
Singapore
Financial authority: Accounting and Corporate Regulatory Authority;
Set of documents: detailed business plan, сonstitutional documents, information about corporate accounts in a local bank;
Additional requirements: At least two members of governing board must be Singaporean residence, 2 years of experience in crypto for the top management, registered capital of S$260,000;
Terms: 6 months;
Price: From S$50,000.
Great Britain
Financial authority: FCA (Financial Conduct Authority);
Set of documents: information about registered crypto wallets, detailed business plan for at least 3 years, additional proof of funds.
Additional requirements: UK residence among the members of top management.
Terms: At least 3 months.
Price: From £15,000.
These requirements seem transparent but have numerous pitfalls. This is why newcomer business founders may look for experts who know how to create a cryptocurrency exchange. B2Broker provides first-class solutions for crypto platforms. Our specialists will lead the way to getting a license for business owners. After that, a White Label trading platform will be ready to invite traders and investors worldwide.