How to register a crypto exchange.
According to various sources, there currently exist from 9,494 to 17.543 digital exchanges. Their popularity results in demand for cryptocurrency exchange platforms. If you plan to run a crypto exchange or develop a cryptocurrency wallet, we will discuss the choice of jurisdiction and the stages of the registration of a crypto exchange.
Why do You need to register a cryptocurrency exchange?
Crypto exchange is a digital platform where cryptocurrencies are traded or fiat money is exchanged for a cryptocurrency (and vice versa). It has a similar pattern to traditional exchanges: buy cheaper and sell at the highest price.
The crypto exchange license allows You to provide the following services:
- trading and exchange of exclusively digital currencies (crypto exchange);
- digital money exchange for other crypto and traditional currencies;
- cryptocurrency storage on deposit;
- transfer or withdrawal of cryptocurrency on bank cards or digital wallets.
These platforms are divided by an essential parameter — centralization. There are four categories:
- centralized exchanges (CEX) “introduce” customers and merchants of digital currencies and fiat money. The distinctive feature of this system is centralized governance, and the advantage is the impressive number of trading pairs and gateways to receive and withdraw fiat money. Their disadvantage is security: clients lose their money if the platform is hacked. The most popular centralized exchanges are Binance and Coinbase;
- decentralized exchanges (DEX) have an important distinction from CEX: transactions are carried out with the help of smart contracts and decentralized applications, meaning your assets belong to you, and all operations are secure. The most popular platforms of this type are PancakeSwap and Uniswap;
- hybrid exchanges (HEX) (e.g., Eidoo and Joyso) combine the advantages of CEX and DEX;
- P2P exchanges ensure sales and purchase of cryptocurrency directly between the users.
How is the registration of a crypto exchange carried out?
To get a crypto exchange license, you are to choose the platform type. It influences the choice of software and peculiarities of licensing. Then you should select the jurisdiction for the registration. The process of regulating and controlling over crypto sphere differs in every country, but if to compare the procedures of incorporation and project launch, some similarities can be outlined. Most often, the following steps must be taken:
- choose the jurisdiction;
- develop a project, considering the nuances of taxation and describing the stages of its realization;
- prepare the package of documents and provide information about shareholders and CEOs;
- develop software and functionality of the platform, considering regulatory compliance and security standards;
- open a bank account;
- obtain the legal address and open an office (and hire local staff, if required by the legislation);
- submit an application for licensing;
- launch the project.
Where to register a crypto exchange?
One of the most popular jurisdictions to register a crypto exchange in Europe are Estonia, Cyprus, Lithuania, Slovakia, Poland, Malta, Switzerland, Italy, and Luxembourg. Let’s consider in detail the specifics of licensing in several countries.
Registering crypto exchange in Europe
License on crypto exchange in Estonia
A course for economy digitalization enabled the creation of a favorable climate for the development of fintech companies in Estonia. There are several advantages of the registration of crypto companies in this country:
- transparent legislation which regulates the “virtual currencies” category;
- rapid procedure;loyalty of a regulator regarding the activity of crypto exchanges;
- absence of income tax;
- no requirements for an obligatory EU citizenship of founders.
Lithuanian license on the crypto exchange
Another European jurisdiction enabling the work in the legal field. The advantages of cryptocurrency license in Lithuania include:
- short terms for registration;
- low maintenance costs;
- virtual currency exchange services are not subject to VAT;
- permission to open accounts in European banks and various payment systems;
- low requirements for authorized capital.
SBSB Fintech Lawyers suggest paying attention to other European jurisdictions. Our lawyers assist with licensing on crypto exchange in Cyprus and licensing on crypto exchange in Slovakia.
License on crypto exchange in Singapore
In this jurisdiction, favorable conditions are created to register a fintech company. We recommend our clients to register a cryptocurrency exchange in Singapore for a number of reasons:
- cryptocurrency trading is legally regulated (Payment Services Act);
- registration of a company in Singapore is cheaper than in Switzerland.
Besides Singapore jurisdiction for the creation of a crypto company, SBSB consultants are ready to assist with licensing on a cryptocurrency exchange in Mauritius and exchanges in the UAE.
SBSB Fintech Lawyers offer custom solutions to their clients. Our lawyers analyze the project, choose the jurisdiction, register crypto exchanges, open bank accounts, and connect merchant accounts, as well as offer consultations regarding taxation and cryptocurrency.