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How To Start Your Bitcoin Exchange – A Beginner’s Guide

You want to start your Bitcoin exchange, but don’t know where to start? Well, you have come to the right place. This article intends to clarify which things you need to consider before you want to launch your own Bitcoin/cryptocurrency exchange, how the internal architecture of exchange software should be structured, and most importantly, where to get your exchange software.



How to Start a Bitcoin Exchange 

1 Establish the operational scope of your exchange

Whether you want to operate globally or confine yourself to a specific region or country, you will usually be required to get the necessary licensing and approvals for your company to open a Bitcoin exchange according to your operational scope. Laws vary from place to place; hence, consult with a legal expert regarding the licensing and compliance with local laws and regulations.

2 Review the country’s regulations and compliance requirements

Almost all governments require entities that are involved in the currency exchange business to adhere to the Know Your Customer (KYC) norms. KYC is the process whereby a business verifies the identity of its customers through government-issued ID cards or passports. The main purpose here is to discourage money laundering. Make sure you adhere to your country’s KYC norms and integrate a suitable customer verification procedure into your exchange. Otherwise, you might be wondering someday why the police are suddenly standing in front of your door.

3 Partner with bank or payment processor

You will need to partner with a bank or payment provider to process payments via fiat currency. Choosing a trustworthy bank with a host of online facilities is a good choice. This is more relevant in developing and under-developed economies where most banks do not have a facility to initiate an instant bank transaction online. Transactions may take up to two days for settlement. Partnering with a bank that has fast clearance and settlements of funds will provide convenience to your customer. Adding and withdrawing fiat funds can be automated via payment gateway or even can be done by manual remittance.

4 Create liquidity on your exchange

Any exchange needs liquidity to operate successfully. Customers are hesitant to place orders or even deposit funds unless they see a full order book and trading activity. New exchanges naturally encounter liquidity issues.

5 Ensure high-grade security of transaction and customer data

Any exchange needs top-notch security to ensure that both the exchange operator’s and his traders’ funds remain secure. This should also apply to your customers’ private data which includes their KYC details and bank account information.

We hope that this article has clarified some misconceptions and will help you better understand the framework behind a Bitcoin exchange. You can also read more about our exchange software solution to learn how white label exchanges work and how to get started.

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