Exploring the Cost to Start a Crypto Exchange

Starting your own crypto exchange generates many questions. They are primarily about the start-up capital or the amount required to develop and launch a reliable exchange platform. But cost assessment is never easy. Therefore, we provide you with a breakdown of what costs you could incur if you think of starting a crypto exchange.

Software expenses

The software which runs the entire exchange is your primary concern. Future exchange owners can opt to develop an exchange from scratch, which is very costly. A more suitable alternative is purchasing a white-label exchange from a trusted vendor and adding extra features in-house. To further decrease operational costs, exchanges should also seek to add tools like CRM, email marketing, or project management software to improve company resilience.

Licensing expenses

The base and license of your crypto exchange could dictate its success. Top-tier jurisdictions indicate more trust for the end-user. On the other hand, off-shore licenses allow an exchange for a quick go-to-market turnaround without much paperwork.

But everything comes at a price. Exchanges could pay as little as a couple of hundreds of dollars for an off-shore license – which has its limitations. Alternatively, a top-tier license can cost up to hundreds of thousands of dollars. In addition, exchanges should perform an external audit, which costs between $20,000 and $50,000.

Employee expenses

Employees are needed, especially if you plan to attract millions of users. You should first consider key employees that add additional value to your platform. There should be a dedicated support desk, preferably 24/7 or 24/5. The trading operation team will ensure user bids and trades are completed.

Next, the compliance team has to ensure registration procedures are done correctly. Again, this can be outsourced to prevent bottom-line pressure. Next, financial operators ensure that withdrawals and deposits are made correctly. Finally, a light technical team is required to avoid technical matters, which leads to capital loss.
Liquidity expenses

This has to be addressed because it directly impacts the user platform experience. Exchange owners should sign external liquidity providers to prevent a lack of liquidity. For liquidity to be aggregated from multiple providers, platforms need to block specific amounts which act as guarantees. The amount blocked depends on the transaction volume.

Payment solutions expenses

Payment solution contracts are required, especially if you operate in a top-tier jurisdiction. In addition, some regulators require exchanges to have established payment solutions. In general, the arrangements depend on the bottom line and the company’s expected turnover.

Crypto exchange marketing expenses

Without a marketing budget, all the expenses mentioned above are ineffective. Exchanges should first create a marketing strategy with the main goal of onboarding new users.

Campaigns are a trial and error, and depending on the customer persona, some are more costly than others. Again, this segment is hard to predict.

If you are looking to start your own cryptocurrency exchange, Soft-Fx offers cost-effective ways of creating a highly valuable business.