Cryptocurrency exchanges play a vital role in the cryptocurrency industry. These platforms allow crypto investors to convert fiat currency such as euros and dollars into the virtual currency.
They also enable the conversion of virtual currency back to fiat currency and one crypto currency into another.
If you are looking to start a cryptocurrency exchange business, here are a few tips and insights to help guide you through the process.
Learn about the Services Required in a Crypto Exchange
When creating a crypto exchange platform, you need to think about all the elements and features going into the exchange service.
The essential services to consider include login and signup, deposit and withdrawal, a transaction feature, and analytics tools.
The analytics feature is necessary because it will provide users with statistics and market trends happening in the cryptocurrency industry. You may also consider having an exchange wallet where users can store their virtual currency.
Another essential service to include in your exchange platform is user verification. You need to incorporate a thorough identity verification process to ensure every user is legit.
A good tip would be to integrate a verification service platform such as IDnow into your signup feature.
IDnow offers Crypto Identity Verification solutions through their IDnow Video ldent and IDnow Auto ldent products.
These two solutions will ease your user verification process while ensuring quick and seamless customer onboarding.
These two products are in compliance with AML (Anti-Money Laundering) and KYC (Know Your Customer) procedures, which every crypto exchange should comply with.
Verification using IDnow takes only a few minutes, and the user’s data remains secure and encrypted.
Obtain Licenses and Permits
Cryptocurrency exchanges are a highly regulated sector. It’s best to seek the consult of a legal expert to advise you on all the licenses and permits needed to open a crypto exchange business.
Here are some of the licenses and permits you may have to obtain:
- A General license to operate a cryptoexchange
- License for an exchange wallet if you want users to store virtual coins on your platform
- Security trading license if you plan to deal with security tokens
- Tax registration
The licensing requirements and costs may vary from country to country, which is why you need to seek the counsel of a legal expert in your jurisdiction.
Decide the Virtual Tokens and Coins You Want to Trade Your next point of action should be to determine the virtual coins and tokens you want to trade.
You can choose to deal with pure coins such as Bitcoin and Ether or security and utility tokens like Filecoins.
The key things to consider when opening a cryptocurrency exchange platform are licenses and permits, the virtual coins and tokens you want to trade, and features and elements to include your service.
Once you have these factors covered, you can think about campaigning and advertising, obtaining funding and gathering an operation and customer support team.
It’s a good idea to consult a legal expert to advise you on all license and compliance requirements.
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