Cryptocurrencies, such as the pioneer Bitcoin, are a trending asset nowadays. Those who invested in them early on didn’t know they were sitting on a fortune until this market gained traction. Now, they have become quite mainstream, and more and more people have expressed an interest in trading them. If you are looking for a profitable venture, you can set up a crypto brokerage to provide people with the opportunity of trading these popular digital currencies. But how do you go about it? What steps have to be followed? If you are ready to be a crypto broker, here are some of the things you need to do:

• Get proper legal counsel for fulfilling licensing requirements

Before you start executing your plan, you need to understand the regulatory demands of being a crypto broker, and for that, you need a lawyer. You will have to obtain proper licensing in all jurisdictions where the company plans to operate. In some places, crypto brokers operate without regulatory oversight as regulation and government haven’t caught up, while in others, they are well-regulated and comply with all policies. Best crypto brokers are the ones that are appropriately regulated. Legal counsel is necessary because the regulatory requirements are different for every jurisdiction.

However, you must remember that cryptocurrency is not controlled under any legislation as off now. The governments and various regulatory authorities have not caught up with the ever-evolving technology that is facilitating the increasing success of cryptocurrencies and blockchain. Therefore, cryptocurrency operators and brokers within the United States and across the world must obtain a license under the category of Money transmitting businesses.

These brokers must also follow the rules and regulations set by CFTC and SEC, amongst others. It is also necessary that all crypto-brokers must know and adhere to KYC – Know Your Customer regulations. The reason is all crypto-broker exchanges fall under the umbrella of being a currency exchange (just like traditional currency or money exchange brokerage).

The KYC regulations are gaining popularity and becoming a more and more prevalent practice to combat financial crimes such as money laundering in the cryptocurrency domain. These rules and regulations have been in place in the United States since 2002, thank the Patriot Act. However, these regulations may vary by each jurisdiction and state. Therefore, while you work to set up your crypto-brokerage, always consult with an attorney to ensure you are abiding by the law.

• Make sure you have the funds

You should know what costs are involved in setting up a crypto brokerage, such as hosting, technology, government registration, legal fees, and advertising. While you may not need all the funds upfront, it is best to have access to enough capital to help you get started.

According to some estimates, you may need a bare minimum investment of $135,000. However, there is no set price for how much it may cost your crypto-brokerage to takeoff. Not giving initial capital funding a proper thought is one of the most critical mistakes made by most new crypto-brokers. Therefore, it is imperative that you plan for the future, consider all aspects. Starting a crypto-brokerage with small capital investment may cover the initial costs of development and planning out your business; however, it will not be enough in the long run. You may end up short on cash to run the critical operations of your establishment until you start making money off it.

Another classical rookie mistake made by most crypto-broker startups is, obtaining a license from dodgy or fraudulent crypto-exchange providers. These crooks charge crypto-brokers ongoing regulation fees but fail to mention what legal obligations the crypto-broker is obligated to at all times, and what financial capital will the brokerage required to set up and maintain the operations of a consistent crypto-broker exchange.

• Find a trading platform or develop one

In order to help your customers trade, you need to have a trading platform. There are two options at your disposal; either offer your clients an existing platform in the market or hire someone to develop a proprietary one for you. This can depend on your budget as well as your preference. Lots of good brokers in the market offer traders the MetaTrader 4 platform by MetaQuotes as it is the top platform in the market.

• Partner up with a payment processor

Not all payment processors are the same. They have different fee structures and policies like the time taken for transactions to be processed. The lowest transaction fee needs to be your priority if you want to compete with other crypto brokers in the market. Apart from settlement time, compliance with PCI DSS, which is a set of best practices for ensuring cybersecurity, is also important.

• Implement strong security

If you want your crypto brokerage to take off, your priority should be to create a safe trading environment for your brokers. You should add two-factor authentication and maintain encrypted databases to give peace of mind to your customers. Cryptocurrencies are a ripe target for hacking and cybercrime, so have strong security measures is important.

Along with these steps, you also need to do live beta testing, have an effective marketing campaign in place, and add reliable and available customer support for assisting your clientele.

• Soft-Opening First

So you have built your crypto-brokerage exchange, and you have everything in place where they should be. You have signed a contract with a financial firm that will facilitate the payment processing for your exchange. You have also taken extra measures to ensure that your crypto-broker exchange is aligned with all the rules and regulations implemented in the crypto-broker industry. You have also deployed some of the best and state-of-the-art security protocols to protect your crypto-brokerage from cyber-attacks. However, you must remember never to open your business doors straight away, always do a beta test and check if the exchange is operational will all its capabilities flawlessly.

• PR and Marketing Campaigns

Once you have launched your crypto-broker exchange, you must connect to outlets such as CoinDesk for crypto updates and news. You must devise an adequate marketing campaign along with financial requirements to promote your business. It will ensure that your initial investment does not run out before you start making profits. Most commonly, crypto-brokers do not assign a marketing budget because they rely on free marketing via various social media platforms until the brokerage reaches a critical number of traders using your business.

• Prompt Customer Support

It may be the last step while setting up a successful crypto-broker exchange. However, efficient customer support will help you shine in your niche and pave your way to long-term success. You must aim to provide customer support that can promptly and efficiently resolve all customer queries, complaints, and technical glitches. Adequate customer service will always respond in a timely fashion, and in order to do so, you must think of using ticketing solutions like ZenDesk and train a staff that is highly knowledgeable and have experience in providing impeccable customer support to your clientele.

Hiring a team that does not know anything about the crypto-broker business will reflect poorly on your business. A tech-savvy customer services team must know what the jargons and technical processes are, and what are the most common issues that a crypto-user may face while trading through your exchange? Therefore, pay attention and hire a team who knows what they are doing.

• Compliance

We live in an era where rules and regulations are more defined than ever. It goes without saying how extremely important it is for your crypto-broker exchange to follow all proposed and applicable laws and regulations. It will help you maintain a legally compliant business in the market. As cryptocurrency is digital and global, your exchange must be compliant with all regulations and laws, not just what is imposed in your local jurisdiction. It is important because you may be in one location, but your user may be sitting on the other end of the world with its own sets of cryptocurrency laws.

As the cryptocurrency legislation is dynamic and rapidly evolving on a global scale, you must hire an in-house full-time legal compliance team. You can also opt to outsource a well-reputed law firm to work as your compliance team with expertise in global cryptocurrency regulations.

Final Thoughts

You must also know that there is no stated step-by-step manual to help you establish a successful crypto-broker exchange. Even if there was, no guidebook could answer all the questions that you may face while you set up your business. However, we hope that this quick guide has given you some basic foundation knowledge of some of the critical areas you must look into. This information will definitely work as a runway for your business plan to take off. Researching your local market, knowing your competitors, and what services they are offering will not only help you devise a strategy to help you compete. Additionally, you can use that knowledge to offer unique services and something no other crypto-broker exchange in your niche is offering.