How to Start a Crypto Exchange Business in 2025-26

Most Crypto Exchanges Fail. Here’s Why Yours Doesn’t Have To.

About 90% of new crypto exchanges shut down within 18 months. That’s not a scare tactic — it’s what we’ve watched happen over and over again after helping more than 500 exchanges launch since 2018. The reasons aren’t mysterious. They’re painfully predictable.

Some founders burn through $200K building custom software that breaks under real trading load. Others launch in a jurisdiction that sends them a cease-and-desist letter three months in. A surprising number simply never solve the liquidity problem — they build a beautiful exchange that nobody trades on because the order books are empty. Dead exchange walking.

But here’s the thing: the exchanges that do survive tend to follow a remarkably similar playbook. They make smart calls on licensing, they don’t waste money reinventing the wheel on technology, they obsess over liquidity from day one, and they launch fast enough to actually test the market before their runway disappears.

This guide is that playbook. I’m going to walk you through exactly how to start a crypto exchange business, based on patterns we’ve seen work — and the mistakes we’ve watched destroy otherwise promising projects.

The Licensing Question: Where Should You Actually Set Up?

Licensing is where most founders either overspend or get themselves into serious trouble. You need to get this right first because it shapes everything else — your banking relationships, which coins you can list, how you market, and ultimately whether your exchange can operate legally.

The cheap-and-fast options ($5K-$25K):

Estonia used to be the go-to, but they tightened requirements significantly in 2022. Right now, the most accessible jurisdictions are places like Saint Vincent and the Grenadines, the Marshall Islands, and Seychelles. You’re looking at $5K to $15K in setup costs and a few weeks to get operational. The trade-off? Some banking partners and institutional clients won’t take you seriously with an offshore license. For a bootstrapped startup targeting retail crypto traders, though, this is often the right starting point.

The middle ground ($25K-$100K):

Lithuania, Poland, and Canada’s MSB registration offer a nice balance. You get a legitimate regulatory framework without the brutal costs of a Tier 1 license. Lithuania in particular has become a hub for crypto businesses in Europe — the process takes roughly 2-3 months and costs between $30K and $60K with legal fees included. Dubai’s VARA license is another strong option in this range, especially if you’re targeting Middle Eastern and Asian markets.

The premium play ($100K-$500K+):

MAS in Singapore. FCA in the UK. BitLicense in New York. MiCA compliance in the EU. These take 6-18 months and cost a fortune, but they open doors that nothing else can. If you’re building a serious, institutional-grade exchange with VC backing, you’ll probably end up here eventually. Just don’t start here. Get revenue first.

My honest recommendation for most founders? Start with a mid-tier jurisdiction, launch your exchange, prove the model works, and then pursue higher-tier licenses as you grow. Spending 14 months and $300K on a Singapore license before you’ve validated that anyone wants to use your exchange is a great way to go broke.

You’ll also need robust KYC/AML infrastructure regardless of jurisdiction. Every regulator on earth requires it now. We’ve integrated with providers like Sumsub that can handle identity verification across 220+ countries — that part of compliance is honestly a solved problem at this point.

Build vs. Buy vs. White-Label: The Technology Decision That Matters Most

I’m going to be direct here: do not build your exchange from scratch unless you have $2M+ and 18 months to spare.

Every few weeks, someone tells me they’ve hired a team of developers to build a custom exchange. They’re always excited about it. And roughly 80% of the time, the project either fails outright, launches with critical bugs, or takes so long that market conditions change completely before they go live.

Building a production-grade crypto exchange means building a matching engine that can handle thousands of orders per second without errors. It means wallet infrastructure for dozens of blockchains. It means a trading UI that doesn’t look like it was built in 2014. Hot wallets, cold wallets, withdrawal queues, admin panels, KYC flows, fee structures, referral systems, staking modules, API endpoints for market makers… the list genuinely doesn’t end.

Binance spent tens of millions building their platform. Kraken has hundreds of engineers. You’re not going to replicate that with a five-person dev team.

Your real options are:

Open-source exchange software: Free to start, but you get what you pay for. Projects like OpenDAX give you a skeleton, but you’ll need serious engineering talent to make it production-ready. Budget $100K-$300K in development costs and 6-12 months of work. The hidden cost here is maintenance — crypto infrastructure changes constantly, and you need people who can keep up.

White-label exchange platforms: This is what I recommend for 90% of new exchange businesses. A good white-label solution like Codono gives you a battle-tested matching engine, multi-currency wallets, a professional trading interface, admin tools, and built-in compliance features. You’re launching in weeks instead of months, for a fraction of the cost. The platform has already been stress-tested by other live exchanges.

You get your own branding, your own domain, your own customizations — your users never know it’s a white-label. And critically, you get ongoing updates and security patches from a team whose entire job is maintaining exchange software.

Licensed commercial software: Companies like AlphaPoint and Openware offer enterprise exchange platforms, typically priced at $100K-$500K plus ongoing fees. Great for funded startups, overkill for most bootstrappers.

The white-label path isn’t the “easy” option or the “lazy” option. It’s the smart option. It lets you focus your time and money on the things that actually differentiate your exchange — your market positioning, your community, your liquidity strategy, your customer support — instead of debugging WebSocket connections at 3 AM.

Real Costs: What You’ll Actually Spend

Everyone wants a number. Fine. Here’s what a realistic budget looks like for launching a mid-tier crypto exchange in 2025:

Category	Budget Range	Notes
Exchange software (white-label)	$3,000 - $15,000	One-time license or monthly fee
Legal & licensing	$10,000 - $60,000	Varies wildly by jurisdiction
Server infrastructure	$500 - $2,000/month	Cloud hosting, CDN, DDoS protection
KYC/AML provider	$500 - $3,000/month	Per-verification pricing or monthly plans
Liquidity / market making	$20,000 - $100,000	Initial capital for order books
Security audit	$5,000 - $25,000	Third-party penetration testing
Marketing (first 6 months)	$15,000 - $50,000	Community building, content, ads
Banking & payment setup	$2,000 - $10,000	Fiat on/off ramp integration
Legal retainer	$2,000 - $5,000/month	Ongoing compliance counsel
Total (6-month runway)	$60,000 - $280,000

The low end is absolutely achievable if you’re scrappy, start with an offshore license, use white-label software, and handle marketing yourself. The high end assumes a mid-tier jurisdiction, professional market making, and a real marketing budget.

What you should NOT do is spend $250K on technology and have nothing left for liquidity and marketing. I’ve seen this kill more exchanges than anything else. Your exchange software could be flawless — if the order books are empty and nobody knows you exist, it doesn’t matter.

My rule of thumb: allocate no more than 30% of your budget to technology, 20% to legal, and keep 50% for liquidity, marketing, and operations. The exchanges that survive are the ones that still have capital after launch.

The Liquidity Problem: Your Exchange’s Existential Crisis

This is the part nobody wants to talk about. You’ve built your exchange. You’ve got your license. The UI looks great. And then… nobody trades. Because nobody trades on an exchange with empty order books, and you can’t fill order books without traders. Classic chicken-and-egg.

Every single exchange faces this. Even Coinbase faced this. The difference is how you solve it.

Strategy 1: Aggregate liquidity from other exchanges. This is the fastest path to usable order books. A good liquidity engine connects your exchange to major venues like Binance, Kraken, or OKX via API, mirroring their order books on your platform. When a user places a trade on your exchange, it’s executed against aggregated liquidity. Your users see deep order books and tight spreads from day one.

This isn’t cheating. It’s how the majority of smaller exchanges operate, including many you’ve probably used without realizing it. The key is transparency with your users about execution.

Strategy 2: Hire a market maker. Professional market making firms like Wintermute, GSR, or Kairon Labs will put capital on your order books in exchange for a fee or favorable trading terms. Expect to spend $20K-$50K upfront plus provide them with trading fee discounts. For your highest-volume pairs (BTC/USDT, ETH/USDT), this can make a massive difference.

Strategy 3: Incentivize early traders. Zero-fee trading for the first 3-6 months. Trading competitions with real prizes. Maker rebates that actually pay people to place limit orders. Referral bonuses that are generous enough to motivate people to actually share. These tactics work, but they cost money — budget for them.

Strategy 4: Focus on a niche. Don’t try to compete with Binance across 500 trading pairs. Pick 20-30 pairs and make them genuinely liquid. Or focus on a specific region where the big exchanges have weak presence. Or specialize in a specific asset class — meme coins, DeFi tokens, RWA tokens. A small exchange that’s excellent for one thing will attract more traders than a mediocre exchange that does everything.

Realistically, you’ll combine all four strategies. Start with aggregated liquidity so the exchange is functional on day one, bring in a market maker for your key pairs, run aggressive incentive campaigns, and focus your marketing on a specific niche where you can actually win.

Security: What Actually Matters (And What’s Just Theater)

After working with hundreds of exchanges, I can tell you that security failures follow a pattern. It’s almost never some genius hacker finding a zero-day exploit in your matching engine. It’s almost always one of these:

1. Hot wallet compromise — too much crypto sitting in hot wallets because someone was lazy about moving funds to cold storage
2. Insider theft — a developer or admin with too many permissions who decides to help themselves
3. Social engineering — someone in customer support gets phished and hands over admin credentials
4. Smart contract bugs — for exchanges running DeFi features with unaudited contracts

Good security architecture is boring. That’s the point. It means keeping 95%+ of user funds in cold storage with multi-signature controls. It means role-based access where no single person can authorize large withdrawals. It means mandatory 2FA for all staff accounts, not just user accounts. It means withdrawal address whitelisting and time-delayed large withdrawals.

The stuff that sounds impressive in marketing — “military-grade encryption,” “AI-powered threat detection” — is mostly noise. SSL/TLS, proper key management, DDoS mitigation through Cloudflare or similar, rate limiting on APIs, regular penetration testing by a reputable firm — that’s your actual security stack.

One thing I’ll stress: get a third-party security audit before you launch. Not after. Before. It typically costs $5K-$25K depending on scope, and it’s the best money you’ll spend. The alternative is discovering vulnerabilities when a hacker finds them for you, and that costs infinitely more.

Also, have an incident response plan. Write it down. Practice it. Know exactly what happens if you detect a breach — who gets called, how you pause withdrawals, how you communicate with users, how you work with law enforcement. The exchanges that survive security incidents are the ones that respond in minutes, not hours.

Marketing Your Exchange: What Actually Works

Forget everything you think you know about crypto marketing. The playbook has changed dramatically since the ICO era.

What works in 2025:

Community-first growth. Build a Telegram group and Discord server before you launch. Get 1,000-2,000 genuine community members who are excited about your exchange. These are your beta testers, your evangelists, your first traders. Community management is a full-time job — hire someone good at it or do it yourself.

Content marketing and SEO. This is a long game but it compounds. Publish genuinely useful content about crypto trading, market analysis, and educational material. Rank for search terms your target users actually search for. It takes 3-6 months to see meaningful traffic, but once it works, it’s the cheapest acquisition channel you’ll find.

Regional influencer partnerships. Not the crypto Twitter accounts with 500K followers who charge $10K for a sponsored tweet and deliver nothing. I’m talking about smaller, regional influencers with engaged audiences of 5K-50K followers in your target market. A crypto YouTuber with 20K subscribers in Southeast Asia who genuinely likes your platform will drive more signups than a celebrity endorsement.

Referral programs that actually pay well. Offer 30-40% commission on trading fees from referred users. Yeah, it’s aggressive. But a user who brings you five active traders is worth 10x what you’re paying them. Make the referral program so good that people want to promote your exchange.

Listing tokens that people want to trade. This is marketing, not just a product decision. Being the first exchange to list a trending token can drive massive traffic spikes. Stay plugged into crypto Twitter, Reddit, and Telegram to spot emerging tokens before the major exchanges list them. That said, do your due diligence — listing a rug pull will destroy your reputation fast.

What doesn’t work: Paid ads on Google and Facebook for crypto are either prohibited or extremely expensive. Banner ads on crypto websites have awful conversion rates. Paying for fake volume or wash trading will get you flagged by analytics sites and blacklisted by serious traders. Airdrop campaigns attract bots, not real users.

Realistic Timeline: Launch in 3-6 Months

Here’s what a realistic launch timeline looks like if you’re using a white-label platform:

Month 1: Foundation

• Choose your jurisdiction and begin the licensing process
• Select and sign with your white-label exchange provider
• Engage a legal counsel with crypto experience
• Register your company, open bank accounts
• Start building your online presence (website, social media, community channels)

Month 2: Setup & Customization

• Configure your exchange platform — branding, trading pairs, fee structure
• Integrate your KYC/AML provider
• Set up server infrastructure and security measures
• Begin liquidity provider negotiations
• Start growing your community (target: 500 members by end of month)

Month 3: Testing & Compliance

• Internal testing with your team — break everything, fix everything
• Third-party security audit
• Finalize regulatory paperwork
• Set up customer support systems and train your support team
• Private beta with 50-100 community members

Month 4: Soft Launch

• Open registration to your community with a limited number of trading pairs
• Monitor everything obsessively — performance, errors, user feedback
• Iterate fast on any issues
• Begin market making operations on key pairs
• Start your referral program

Month 5-6: Growth Phase

• Public launch with full marketing push
• Add more trading pairs based on demand
• Scale customer support as user base grows
• Optimize based on real data — where are users dropping off? Which pairs get the most volume?
• Evaluate additional features — staking, lending, futures, P2P trading

Some teams move faster. If you’ve done this before and have a clear regulatory path, you can launch in 6-8 weeks. But for first-timers, trying to rush below 3 months usually means cutting corners on security or compliance, and that’s never worth it.

The Mistakes That Kill Exchanges (Learn From Other People’s Failures)

After seven years of watching exchanges launch, grow, and sometimes crash, here are the mistakes that come up over and over:

Spending everything on tech, nothing on liquidity. I’ve said it twice already and I’ll say it again because it’s the number one killer. Your matching engine can process a million orders per second — great, nobody cares if there are only 12 orders on the book. Allocate at least $20K-$50K specifically for liquidity operations.

Ignoring compliance until it’s too late. “We’ll figure out the legal stuff later” is a phrase I’ve heard from founders who later received regulatory enforcement actions. It’s exponentially cheaper to set up proper compliance from the start than to retrofit it under pressure from regulators. And once you’re flagged, banking partners disappear overnight.

Trying to launch globally from day one. Pick one or two regions. Dominate them. Expand later. An exchange that’s beloved in Southeast Asia is a real business. An exchange that’s mediocre everywhere is dead.

Underestimating customer support. Crypto users have questions. Lots of questions. About deposits that seem stuck. About KYC verification. About how limit orders work. If your support response time is 48 hours, users leave and they tell everyone about it. Budget for at least 2-3 support agents at launch, with coverage across major time zones for your target market.

Listing hundreds of tokens immediately. Each token you list requires wallet infrastructure, monitoring, and support. Start with 20-30 quality tokens with real volume. Add more based on actual user demand, not because you think a bigger number looks more impressive.

No fiat on-ramp. If users can’t deposit dollars, euros, or their local currency directly into your exchange, you’ve immediately limited yourself to people who already own crypto. And those people already have an exchange they use. Fiat on-ramps through payment processors like MoonPay, Transak, or direct bank integration should be a launch priority, not an afterthought.

Running out of money before achieving product-market fit. This is the meta-mistake that encompasses all the others. Every dollar you waste on unnecessary custom development, premature premium licensing, or ineffective marketing is a dollar you don’t have for the iteration and pivoting that every startup needs. Stay lean. Launch fast. Measure everything. Iterate.

The Bottom Line

Starting a crypto exchange business is genuinely achievable in 2025. The technology is mature. The regulatory frameworks — while still evolving — are clearer than ever. And despite what some people think, the market isn’t oversaturated. There are huge underserved markets in Africa, Southeast Asia, Latin America, the Middle East, and Eastern Europe.

But achievable doesn’t mean easy. You need to be realistic about costs, disciplined about focus, and honest with yourself about what you don’t know. The founders who succeed are the ones who treat this like a real business from day one — not a side project, not a get-rich-quick scheme.

If you’re serious about this, start here. Evaluate the technology, talk to us about your specific market, and figure out whether this is the right move for you. We’ve helped hundreds of exchanges launch successfully, and the first conversation is always free.

The crypto exchange market isn’t going anywhere. The question isn’t whether there’s room for new players — there absolutely is. The question is whether you’ll be smart enough about how you enter it.

Good luck. You’re going to need some of that too.