How to start a crypto exchange? If you are an aspiring startup then this will be your frequent query. As per Skyquestt’s analysis of the cryptocurrency exchange market, the expected market capitalization will be around USD 13.19 billion in 2031 with a 12.5 % CAGR. Many people created brand new crypto exchanges in the last five years. And they have also imprinted their brand names among many people by building a strong crypto community.
If you also want to start a crypto exchange business and search for the correct answer on how to start a crypto exchange then you have landed at the right blog.
This article covers 10 simple steps on how to start a crypto exchange business successfully in 2024. Our step-by-step guide will help you with everything that you need to know on how to start a crypto exchange platform successfully.
Let’s start with…
Why Should you Start a Crypto Exchange?
Starting a crypto exchange will be a better choice for startups who want to shine in the crypto market. Some of the business perks of creating a crypto exchange are,
- Higher Revenue Streams – Crypto exchanges are meant to offer various earning modules like listing fees, transaction fees, subscription fees, fiat-to-crypto conversion fees, etc. You can reap huge profits with the crypto exchange business.
- Global customer Base – You are capable of building a higher global outreach with your crypto exchange platform. The crypto exchanges help you to gain a vast set of users.
- Business Possibilities – The cryptocurrency exchange development adds value to your further crypto-related business. For instance, if you start a crypto exchange, then you can start your own DeFi platforms, wallets, and NFT marketplaces. From here it is clear that creating a crypto exchange will sow seeds for various other business ideas.
As creating a crypto exchange offers numerous business-based perks, many startups tend to start a crypto exchange with multiple features.
How to Start a Crypto Exchange with 10 Easy Steps?
- Craft a Perfect business
- Choose the right location
- Choice of the type of exchange
- Obtain a crypto license
- Pick the best Development Method
- Architecture Design
- Feature Integration
- Development Phase
- Testing
- Marketing & Promotion
Step 1: Craft a Perfect Business Plan
To start a crypto exchange business, you need to do some market research in the crypto space. First, you must understand the crypto market, like how it functions and what are all the types of crypto trading that take place in exchange platforms. Apart from this, you need to understand the price fluctuation of cryptos in the marketplace. Frame the roadmap for your crypto exchange business along with the resource, and tools. Get guidance from experienced developers to prepare your roadmap.
So you need to deeply analyze whether this would be the perfect time to start a crypto exchange business. If everything falls into the right place you can proceed to the next step.
Step 2: Identify the Right Location
You need to decide which would be the right and best place for starting a crypto exchange platform. Because, some major countries like Russia, Bolivia, and Nepal are saying “No” to cryptocurrency. Meaning it is considered to be illegal and forbidden in those countries. So you cannot start a crypto exchange business where there is no value and you can’t launch a website against government rules & regulations.
However, some countries are allowing people to trade cryptos and start a cryptocurrency exchange. Here is the list of top cryptocurrency-friendly countries in 2024.
- The United States of America (USA)
- Germany
- Japan
- Singapore
- Malta
- South Korea
- El Salvador
- European Union countries
You can choose any of these locations or conduct in-depth research to find the right location for creating the crypto exchange website or application.
Step 3: Obtain a Crypto License
The law for cryptocurrency differs in every country, so it is advisable to examine the rules and regulations in the country where you intend to start a crypto exchange business. In addition, proper licensing and registration are needed for operating a crypto exchange website and app in any country.
In many places, crypto trading platforms are operated without significant oversight. However, in the US, digital currency operators must get proper licenses from the government for Money Transmitter businesses. Moreover, they must also follow SEC & CFTC rules and regulations. Hence, consult a legal expert in the crypto field before creating a crypto exchange business in your desired country.
Step 4: Choose the Type of Exchange
Deciding the type of exchange is crucial before starting your crypto exchange business. As of now, there are three different types of cryptocurrency exchanges in the global digital marketplace. They are,
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Centralized Exchange
Centralized crypto exchange (CEX) is an admin-controlled platform where users can trade a wide variety of digital currencies in a risk-free manner. There will be an administrator for every crypto transaction. When a user completes their trading, the admin of the exchange will charge a fee as a commission and it helps the owner to generate a lucrative revenue easily.
Also, user transactions and crypto wallet balances will be monitored by the admin of the exchange. Order book exchange, ads-based crypto exchange, Crypto derivatives exchange, and a user-to-admin (OTC) exchange are part of the centralized exchange.
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Decentralized Exchange
Decentralized crypto exchange(DEX) is a peer-to-peer exchange platform and it functions without the admin or any third parties. In this type of crypto exchange, user privacy is highly protected and users will have full control over their funds. So most crypto traders prefer a decentralized exchange platform rather than a centralized exchange.
Besides, this type of exchange has strong security systems when compared to CEX platforms. You can also create your own decentralized exchange with proper consideration and resources.
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Hybrid Exchange
To be precise, a hybrid exchange is a combination of both centralized and decentralized exchanges. This type of exchange includes both the features and security mechanisms of CEX and DEX. For instance, the Binance exchange platform is a good example of a hybrid exchange that offers various features of CEX and DEX.
These are the major types of exchanges. Select the best type of crypto exchange that matches your business needs before crafting your crypto exchange website or app.
Step 5: Pick the Best Development Method
Creating a cryptocurrency exchange platform is a complex process and it requires a lot of technical expertise. There are two main ways to start an exchange – from scratch or by using premium white-label software.
- Custom Solution – In general, starting a crypto exchange from scratch requires more time, adequate funds, and resources, but it gives you the flexibility to customize your platform according to your needs. Hence, this method will be suitable for established entrepreneurs who want to create their own identity. But, if you are a newbie startup, then you can go with another method.
- White-label solution – On the other hand, we have white-label crypto exchange software that helps to start a crypto exchange cost-effectively and instantly. It is easy to implement when compared to starting from scratch. Besides, it also gives you access to all the features of an advanced trading platform without having to build it yourself.
When deciding on the development method, it’s important to consider how long it takes to develop a cryptocurrency exchange. Starting from scratch might take several months to over a year, depending on the complexity of the platform. On the other hand, using white-label solutions can significantly reduce the timeline to just a few weeks.
No matter which method you choose, both have their pros. It’s important to understand them before deciding on which one is right for your project.
Step 6: Architecture Designing
After choosing the method to start a crypto exchange for your business, you can move on to the designing process of the cryptocurrency exchange architecture. For designing an effective exchange architecture, enabling four essential components is mandatory. They are,
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Trading Engine
It is the core component of any cryptocurrency exchange website. This component helps to perform transactions and has access to order books. Thus, the trading engine is an important component of starting an exchange platform.
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Crypto Wallet
A cryptocurrency wallet is a primary component in the exchange as it is used to store, receive, and transfer a wide range of cryptos securely. Without crypto wallet integration, you can’t initiate a crypto exchange website or app. So, implement a hot or cold storage type crypto wallet to offer a hack-free environment by creating a cryptocurrency trading platform.
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Admin Control Panel
The admin panel is a type of control center where the admin manages the whole trading platform. All the orders, alterations, user management, transaction management, and other essential activities are done in this panel.
It includes various tasks such as managing crypto trading pairs, trading fees, customer support, approving and verifying user accounts, transaction pending requests, new updates, and even more.
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User Interface & Experience (UI / UX)
The UI/UX is also an important component that you must take into account while building a crypto exchange website or app. The UI/UX must be fascinating and friendly because it helps to provide an amazing trading experience to your users.
You need to make sure that the UI/UX is compatible with multiple devices like smartphones(Android/iPad, tablets, and all browsers. To satisfy your global users and target audience, you must enable the following reliable functions.
Step 7: Integrate the Latest Features
Features play a vital role in starting a crypto exchange website successfully. The Trading features must be more effective for the users in your exchange. Integrating such features will help you to grab many crypto users from various countries and increase the overall user base of your exchange. Here we list ideal technical features that you must integrate into your exchange website and app.
- Margin trading
- Order book
- P2p trading
- Market making
- IEO module
- Referral program
- Effective User dashboard
- Liquidity API
- Multi-lingual assistance
- Crypto Payment Gateway integration
- Automatic KYC/AML verifications
- Staking
By incorporating these trading features, both the experienced and the newbies will get the best trading experience. Next, you need to implement high-level security features. Here we list some high-level security mechanisms that you must enable on your crypto trading website.
- HTTP authentication
- Jail login
- Data encryption
- Two-factor authentication
- SQL injection prevention
- Anti-denial of Service(DoS)
- Cross-Site Request Forgery(CSRF) protection
- Server-Side Request Forgery(SSRF) protection
- Anti-Distributed Denial of Service
By integrating these protective systems, you can eliminate hacking and other fraudulent activities in your exchange platform.
Step 8: Development Phase
Then, you can delve into the development phase of the crypto exchange platform. Choose the best back-end, and front-end tools for exchange platform creation. You can get help from an experienced development team to ensure the quality of your crypto exchange.
Step 9: Testing
After integrating all the important trading functionalities and security features, you can run a beta test. By performing the beta testing, you can collect the errors, bugs, and issues in the exchange. If unfortunately, your platform faces any issues in testing, you can easily rectify them instantly.
Once the beta testing is over, your exchange is ready for the deployment phase. In this phase, you will get your fully functional and ready-to-go live trading platform. After your exchange gets deployed with the help of professionals, you need to market your exchange through promotions.
Step 10: Maintenance
The process of creating your crypto exchange does not stop with the deployment. Maintenance has to be done periodically for your platform as there will be some anonymous attackers who will look for some security hole to inject threats. This is not to threaten you, this is just a word of caution from our side. Thus, ensure whether your exchange platform is maintained with upgraded security modules or not after deployment.
These are the 10 steps involved to start a crypto exchange platform. By following these steps you can successfully launch a crypto trading platform for users. You must ensure that you carefully choose a cryptocurrency exchange development company.. Analyze their client testimonials, past portfolio, and developers.
In that regard, Coinsclone is a potential Cryptocurrency exchange development company that offers various solutions to start a crypto exchange.
Why Choose Coinsclone to Start a Crypto Exchange?
Coinsclone is a well-established cryptocurrency exchange development company in the crypto space. Being a leading crypto firm, we excel in providing all sorts of crypto exchange services. Such as white-label crypto exchange, decentralized exchange script, and more. We have seasoned blockchain coders who have a lot of experience in delivering exchange products. Our team of experts will guide you to start your crypto exchange website with ideal features and security modules.