If you’re thinking about starting your cryptocurrency exchange, one of the first things that come to mind are questions like, “How much money do I need for my start-up?’ Unfortunately, cost assessments aren’t always easy, so we’ve taken some time to break down precisely what costs could be incurred to know where capital is needed.
To make the most out of your exchange, it’s important to select software that can satisfy all user demands. White label exchanges are typically cheaper and easier than developing a new exchange from the ground up. Each exchange should consist of a matching engine, liquidity aggregation, and a trading platform, as they are indispensable features for any exchange. White-label exchange can save owners a lot of money and still contain essential elements without paying over-the-top costs, but they must include tools to allow the platform to scale further.
Choosing a license becomes as crucial as choosing your software. Selecting an offshore license is a cost-effective solution but will limit your exchange in the long run as it restricts your payment gateway selection. Top-tier licenses can cost exchanges tens of thousands of dollars; however, they will be rewarded with a higher capital flow once the exchange is running. Nonetheless, top-tier licenses require more paperwork and must be audited, incurring additional costs.
The bulk of the capital is spent on employees to ensure operations are running smoothly and users continue to come back. Thus, a crypto exchange should hire a support, compliance, and finance operations to answer any user requests, make sure payments are executed, and conduct KYC to ensure no fraudulent activities are taking palace.
On top of that, trading operations and technical teams are needed to ensure the platform software is running smoothly and can monitor platform activity such as liquidity management or aggregation on the backend.
Exchanges should ensure the platform has enough liquidity, and depending on their business model, a new crypto exchange should have an appropriate market depth. This means that external suppliers will require an opened checking account where capital must be placed and cleared once transactions are executed. In addition, depending on the amount of trading activity, more money might be needed to be locked in the accounts.
Payment solutions expenses
Payment solution diversity defines the number of users an exchange can potentially acquire. As a result, businesses should have more payments available; however, their expenses will significantly depend on their general turnover.
Defining the marketing budget is like a needle in a haystack. It greatly depends on your target audience. But, as a general rule, marketing should be guided by your target audience. Unfortunately, there is no one-size-fits-all strategy, and exchanges must gather data before defining a budget.
A new exchange could spend between $1,000 to $10,000 on staff for monthly operations and obtain a license starting from $20,000. A white-label exchange will draw funds worth at least $30,000, and a monthly marketing strategy can cost roughly $60,000 per calendar year.
Soft-FX provides future crypto exchanges with cost-effective solutions for their upcoming venture!