Featured article by Kevin Anderson Â
Cryptocurrency exchange has become one of the most profitable segments of the blockchain industry. Launched in 2017, the Binance project, for example, expects a profit in the region of $ 1 billion by the end of this year. What aspects should you keep in mind when launching an “exchange platform”?
Decide on the jurisdiction
The choice of a country with a suitable legal framework is the main criterion on which novice exchange traders should be guided. Many countries are still in search of optimal legislative structures. An important factor is taxation, on which the final profit will depend. The most advantageous in legal terms today are Puerto Rico, Cayman Islands, Mauritius, Malta, Australia, Switzerland and Japan.
Collect all required papers
After choosing a place of registration, you will need to study all regulatory requirements. The height of the stack of required permits and approvals will depend on the legal regulations adopted in the country. It is better to entrust this to local lawyers who are familiar with the legislation. Mandatory requirements in the vast majority of regions are KYC and AML
Purchase or rent of server equipment
There are two main ways to deal with servers – buy them or rent them. The purchase will cost at least several thousand dollars, but the equipment will remain in property. Hosting is several times cheaper, but for owners of financial resources it is better that no one else has access to the equipment.
Develop or buy software
To exchange cryptocurrency, you need synchronized software. It necessarily includes a user interface, a trading “engine” and a wallet. You can create software from scratch with the efforts of developers, or you can purchase open source and modify it. The finished application may be free, but it will also take time to debug, and the vulnerabilities are too well known to hackers.
Start partnering with financial institutions
Processing centers or banks will be able to provide transfers. Please note that not all financial institutions are loyal to cryptocurrencies and support their free circulation. The main requirement for a bank is the speed of transfers and security.
Protection and safety; audience selection
Crypto exchanges are more likely to suffer from hacks and hacker attacks. Protection needs to be constantly updated, including receiving feedback from users.
You can open acrypto exchange platform with different currencies presented, or you can limit yourself to one state. After pegging the currencies, you need to conduct an advertising campaign with the involvement of opinion leaders.
Customer support 24/7
There is nothing worse for an exchange service than leaving customers without technical support. You need to supervise:
– deposit issues;
– transaction failures;
– anti-money laundering;
– software glitches.
Providing liquidity
Liquidity is an important part of the existence of a crypto exchange business. The trading API will come to the rescue – a set of ready-made functions provided by the exchange for use in external programs. The public API collects data on the state of markets, trading volume, etc. A trading bot will connect your project with a major exchange and establish exchange operations.
Commission size
The commission for making transactions is a maximum of 0.5% of the amount, but generally they take 0.1-0.2%. The average verified exchanges have a daily turnover of about $ 10 million. The owner will earn about $ 10 thousand per day on commission alone.
