When developing a crypto exchange, you must ensure that your platform complies with some Fintech regulation requirements and guidelines. This includes both regulatory compliance and safety standards.
Here is what you should pay special attention if you do not know how to create a cryptocurrency exchange.
Safety
The security part must be completed when answering how to create a crypto exchange. Security is a vital feature of any platform that works with money. To make a successful cryptocurrency exchange platform, you need to pay special attention to data storage and transaction security. There are more and more methods of hacker attacks, and attackers can either attack your server, hack the admin panel, or attack specific users. Your task is to prevent them from doing so.
When protecting user accounts, we recommend using basic security methods, including two-factor authentication, secure libraries and frameworks, manual admin confirmation of large transactions, and cold wallets. We also mentioned the importance of user verification, especially if you are dealing with fiat-to-cryptocurrency exchanges and vice versa. We advise you to follow KYC (know your customer) and AML (anti-money laundering). KYC’s primary goal is to guarantee that unauthorized clients are not permitted to use the service, so you ask users for the appropriate identification documents, such as photos, ID cards, bank account or credit card details, etc.
If you have chosen the centralized exchange type, you will need administrators to manage it. Take care of the security associated with this. Create roles so that each person has access to a small part of the required information and only has access to part of the database. Critical operations should require a confirmation from multiple administrators. Also check: https://trading.biz/
Other ways to ensure security include regular backups, check amounts, and secure integration with external services (CRM, email, SMS). Discuss with your crypto exchange development team how to implement other security best practices for your platform.
How to create a cryptocurrency exchange? Legal Compliance
Compliance is always a plus for a platform. It increases user confidence. Moreover, if you work with paper money, you will most likely have to comply with state and government standards. You may need a license or a bank account. It all relies on the place where you will register your crypto-exchanger. Regulation is optional if you want to work exclusively with cryptocurrency on the blockchain. Still, it would help if you kept in mind that you will also receive any income in cryptocurrency.
The best countries for registering a cryptocurrency exchange platform have been working with cryptocurrencies and blockchains for a long time. Among them are Estonia, Malta, Switzerland, Australia, and Singapore. For example, Estonia became the 1st country to execute blockchain at the state level.
Liquidity management
Liquidity is one of the essential factors in a cryptocurrency exchange. Traders are looking for a platform that will allow them to exchange one asset for another quickly. In other words, the exchange must provide enough buy or sell orders to complete the transaction at a reasonable price. Therefore, when creating your crypto exchange, you need to consider the mechanisms for providing liquidity:
- Third-party market makers. This path involves an agreement with providers who trade at many different locations simultaneously and can provide the liquidity needed for one site by transacting on other sites.
- Creation of the inter-exchange market. This strategy also allows you to contact a market maker, but that maker is the operator of the site, not a third party. At the same time, this operator is a market maker on one or more other exchanges.
- Liquidity mining. This method of maintaining liquidity is most associated with cryptocurrencies as it relies on the support of a decentralized community. Its essence is that liquidity providers are rewarded for facilitating trade.
How to create a cryptocurrency exchange? The process of developing a platform and service for the exchange of cryptocurrencies
After working out the business part, and technical requirements and choosing the type of exchanger, you can start developing your crypto exchange. Choose to work with a group of professional creators who can supply you with prosperous case analyses. Selecting a professional provider will help you reduce your development costs. Creating a cryptocurrency exchange platform usually consists of the next stages.
UX / UI design
Established on your needs and market analysis, the design team makes a compelling user experience for your platform. Clear visualization will contain potential UX-related problems and let you notice user interaction with the exchange.
Front end development
Front-end development is the implementation of user interface design. At this stage, the developers create the side of your exchange that is visible to the user. This part is responsible for the appearance of your platform, which is very important for attracting and engaging users.
Back-end development
The internal function is liable for the logic of your platform and all the required procedures. The development team can operate the outcome of a classic trading exchange optimized by counting on the geography of the exchange enrollment. This system is then adjusted to fit your needs, making a customized trading engine. The company can even operate diverse APIs for extra integration with third-party help.
Development of enhanced security features
At this stage in developing a crypto exchange, specialists implement various security features so that the platform is reliable for you and future users. One of the most critical security measures is the encrypted database and password-protected user access.
Placement of digital currency on the exchange
Maintaining an opinion of what cryptocurrencies you desire to record on your exchange, the development team counts the required coins to the platform. After that, users can purchase and trade various kinds of cryptocurrencies.
Launch of a crypto exchange
After all the tests and modifications, your cryptocurrency exchange platform is prepared to go. There is much advancement and help to work ahead, but with a grade software product, these methods will be much easier.
How to create a cryptocurrency exchange? How a Development team will help you create a cryptocurrency exchange platform?
The team should have an extensive experience in blockchain development. After studying the requirements, the development team selects the required technology stack and creates a robust and reliable platform for traders, including, for example, the following features:
- wallet with more than 50 virtual currencies and the ability to add new ones;
- security features – all data is stored on remote servers and protected 24/7;
- fully customizable TradingView chart with advanced trading tools;
- multilingual service – the crypto exchange will be available in several languages;
- multi-platform support (Web, iOS, Android, Windows, macOS);
- mobile application based on a comprehensive order book and fiat money integration;
- design development for a crypto-exchanger.
With full-cycle software development services, you don’t need to hire different teams to bring your idea to life. The internal team allows for solving various tasks using the company’s resources. They will help you design, develop, test, and support cryptocurrency exchange platform.
