The global demand for crypto trading and associated services is on the rise, while the regulations tighten. Such a reaction from the authorities has been expected all along: as crypto exchanges expand their clientele, transparency and data protection grow more urgent than ever. At the start of the year, Binance, one of the key players in the global crypto market, claimed to have surpassed the milestone of 250 million registered users.
In 2025, the success of your crypto exchange business depends less on tech and more on legal clarity and compliance. Often, ambitious entrepreneurs-to-be don’t know when to start when it comes to obtaining a license and legalizing their operations. This guide is designed to help, providing a step-by-step licensing strategy and a business build-out plan for a legal and future-proof crypto exchange.
The Importance of Engaging a Legal Crypto Exchange
Throughout the previous year, governments around the world have made it a point to regulate cryptocurrency even further. A significant regulatory change regarding compliance for cryptocurrency in the EU occurred in late 2024. Specifically, on December 30th, the Markets in Crypto Assets (MiCA) regulation went into effect. Following the lead of MiCA, other jurisdictions – including offshore jurisdictions – began to re-evaluate their license requirements. The following countries took inspiration from MiCA:
- Bulgaria: Passed a MiCA-style crypto law in July 2025 that established licenses, capital reserve requirements, and rigorous enforcement for exchanges and stablecoin issuers.
- Ukraine is getting the process started to bring regulations modeled on MiCA, with a draft law coming soon that would regulate crypto markets and stablecoins.
- Hong Kong: Passed a stablecoin licensing scheme in 2025 that incorporated AML, governance, and investor protection, and drew from the MiCA concepts.
- Singapore: Started a stablecoin regulatory scheme in 2023 requiring full reserves and close supervision, closely aligned with MiCA in spirit.
- Southeast Asia (Vietnam, Thailand, Philippines): Look into crypto licensing and sandbox possibilities, using MiCA as a general guideline or reference regarding investor protection.
- Offshore hubs (UAE/Dubai, Cayman Islands, Malta): Look at MiCA as a point of reference, while still providing a varied crypto framework that adheres to the unique nature of jurisdiction.
As a result of global regulatory changes, many established blockchain companies have begun to question the potential consequences of being “out of compliance.” Companies are becoming increasingly anxious and concerned about the chances that their internal policies and procedures may be slightly stale. Therefore, many companies are exploring jurisdictions with clearer or more flexible conditions of operation. A BVI VASP, for example, is entering the conversation as companies seek to find a careful line between compliance and opportunity to grow their business.
Expert Opinion: What Would You Do to Protect Your Crypto Exchange?
Operating your crypto exchange without the appropriate license—any kind of license, for that matter—is exposing your company to risks that include fines and potentially higher costs of remedial change, the possibility of forced shutdowns, and frozen funds that may cause collateral damage to your reputational and contractual relationships with customers. A crypto license isn’t just one more thing to pay for and submit to “the government”; it is actually the first step toward building your credibility as a legitimate crypto exchange.
In fact, acquiring a license before your competitors can accelerate building credibility in your organization, generating institutional investment, and facilitating the development of reliable banking and payments relationships as a foundation to support performance for sustainable growth in the crypto space.
How Your Business Model Affects Licensing
The course of your exchange depends to a great extent on their underlying business model. Regulators will treat an exchange differently based on the specific nature of that exchange, and this, in turn, determines the jurisdictions that apply, the compliance demands, and the costs associated with that.
Centralized Exchanges (CEX)
Because CEX platforms hold customer assets and hold custodial wallets, they have by far the responsibility of the heaviest amount of regulations. Licenses typically require a large amount of capital reserves, a comprehensive AML/KYC framework, along ongoing periodic audits.
Decentralized Exchanges (DEX)
Even though some jurisdictions are still figuring out how DEXs will be regulated, operating a DEX does not automatically absolve you from compliance standards. Even without custody, you may still need to register as a financial services provider if your platform facilitates trading or charges fees.
Hybrid Models
Platforms combining centralized and decentralized elements must comply with both sets of requirements, which usually makes their licensing strategy more complex and costly.
Brokerage Models
While sometimes acting as an intermediary instead of a full exchange can de-risk some licensing requirements, most countries will still treat crypto brokerage as a regulated financial activity.
White-Label vs. Custom Solutions
White-label exchanges may take on some of the licensing scope from the provider, but the operator is ultimately responsible for licensing and compliance in their jurisdiction. Building a custom exchange allows full control over the operating system, but puts the operator in charge of the entire licensing process.
Those who are already sure of which business model to settle on often struggle with which jurisdiction to build it in and even which type of license to pursue. The model you settle on will influence your jurisdictional flexibility, compliance costs, and time to market:
- Jurisdiction Flexibility: A DEX may have more options in lightly regulated jurisdictional hubs, while a CEX may need to target established financial and securities centers.
- Cost of Compliance: from no reporting for brokerages all the way to committing multimillions to reserves and audits for custodial CEXs;
- Time to Market: White-label solutions may have existing licenses and compliance support, while fully licensed CEXs can take a year or more.
- Regulatory Classification: Many regulatory bodies classify platforms offering derivatives or margin trading as securities and require additional approvals.
When it comes to banking access, exchanges that have solid licenses from reputable jurisdictions have much easier access to banking and payment relationships than if they are situated in offshore jurisdictions.
If you are unsure of which category your project falls under, as far as licensing goes, it is highly recommended that you consult with someone who has experience in crypto exchange licensing. A licensed legal and/or technical professional can conduct a full analysis of your company and provide you with a specific compliance roadmap that is tailored to your needs.
Licensing Requirements: What to Expect
While technical and financial aspects are important, it’s the license that guides your crypto exchange to the market, ensuring its visibility for clients and partners. Once you have decided on the location and considered all the pros and cons, you will have to start preparing a licensing application. This is a layered, step-by-step process that often scares first-time entrepreneurs away. Knowing the requirements for your particular project type is halfway to success.
Company Formation
Obtaining a license starts with the creation of a legal entity in your chosen jurisdiction. This is an important first step – it allows you to ensure you are in compliance with local corporate laws and is often the first step in an overall regulatory application. In order to create your company, you must generally register the company, get a legal address for its place of business, and appoint directors or representatives as required by the law.
In order to meet the expectations of the applicable authorities, your corporate documents, like the Memorandum and Articles of Association, must be properly drafted and should set out the intended purpose of business activities. The applicable authorities will typically review your structure to validate the intended purpose of licensing, so thorough preparation is required.
Due Diligence
Licensing authorities will perform comprehensive due diligence on all relevant persons and the company itself to assess credibility and integrity. The due diligence process includes personal and professional history and any past involvement in financial or regulatory offenses. Generally, the identified founders, directors, and beneficial owners of the company will be required to provide detailed identification, their professional records, and references to help demonstrate that they are trustworthy.
Background checks will often include criminal and financial background checks to deter unacceptable conduct in the regulated sectors. Making full and frank disclosures and doing it adequately will go a long way to enhance the ability to successfully license.
AML/KYC Compliance
Know Your Customer (KYC) and Anti-Money Laundering (AML) obligations are essential to most licensing regimes, and authorities will examine your preparedness carefully.
You must implement clear policies to verify client identities, monitor transactions, and detect suspicious behavior. Staff training and internal reporting mechanisms are also required to ensure that compliance is maintained at every operational level.
Licensing organizations will assess not just the existence of these frameworks but their usefulness and effectiveness. A solid AML/KYC framework shows that your business can act responsibly in the financial environment.
Capital and Budgeting Requirements
Financial preparedness is a significant factor in licensing because authorities require assurance that your business can support its operations and satisfy obligations. Companies are frequently asked to demonstrate minimum capital reserves and present detailed business plans and financial projections for several years. These documents should identify how you plan to fund your company, any relevant expected expenses, and how you intend to manage liquidity in order to demonstrate that you can operate your business effectively.
Regulators intend to use this information to start assessing whether the company can endure financial pressures while meeting obligations to clients. The information is needed not only for compliance purposes but also to demonstrate financial stability and longevity.
Economic Substance
Many jurisdictions now require licensed companies to create real economic substance by requiring that business is actually conducted in the specific jurisdiction. For example, having local employees, local office locations, and other business operational resources, and assuring that local management and decisions are taking place within the jurisdiction.
In some instances, entities may seek proof that your business is providing a real economic value locally and that your business is not merely renting an address. They want visible operational substance, which is generally necessary for compliance, and may be audited or subject to verification. Showing true economic activity improves your credibility and is better aligned with regulators’ international expectations.
Ongoing Obligations
Getting your license is just the starting point; maintaining your license requires continuous compliance with regulators’ expectations. Companies need to provide regular reports, including financial statements and compliance reporting. Licenses should generally be renewed before they expire, and any applicable fees should be promptly paid. Generally, if there are any changes in the ownership, management, or business functions, you will be required to formally notify the regulators of those changes.
In addition, authorities may conduct audits, inspections, or reviews to verify ongoing adherence to licensing standards. Sustained compliance reflects organizational discipline and protects the company from penalties, reputational risk, or license revocation.
Incorporating Compliance into Your Crypto Exchange Operations
Getting a crypto exchange up and running requires a great deal of technical effort, but the legal and administrative aspects can often prove to be even more aggravating, especially for entrepreneurs who may have limited experience and knowledge of the various crypto regulatory frameworks around the globe. For the sake of your company’s reputation, compliance must be a primary focus. Compliance at all times means:
- Hiring of AML Officers, who are qualified individuals entrusted with the responsibility of managing Anti-Money Laundering (AML) and Know Your Customer (KYC) operations, ensuring that the company meets regulatory standards every minute of every day;
- Creating Compliance Manuals, comprehensive and thorough write-ups that specify policies, procedures, and internal controls that are utilized to ensure compliance and carry out daily operational tasks;
- Creating Reporting Structures, which are systems for tracking transactions, identifying suspicious behaviors, and reporting transactions to regulators or internal auditing teams in a timely fashion;
- Planning for Regulatory Audits, utilization of processes and document practices that allow the company to respond appropriately to audits, on-site inspections, and audits occurring at the request of regulatory authorities.
It is natural that not every entrepreneur knows how to deal with establishing compliance alone. Henceforth, a good legal partner provides ongoing support with integrating all the essential practices. Expect assistance in finding a fitting candidate for an AML Officer, preparing compliance policies and manuals, structuring reporting systems, and responding to regular audits.
What is the price to obtain licensing for a crypto exchange?
When it comes to crypto licensing, the price is surely the most common question posed. A simple formula includes three types of expenses: fees for incorporation and licensing, initial capital reserve, and periodic expenses (license renewal, notary fees, etc.).
For sure, some peculiarities of jurisdictions are more economical than others, but of course, “no budget” jurisdictions have low or no reputation worldwide. Plan your licensing budget accordingly:
- Company Registration and License Fees. This is the initial expense to legally establish your company and obtain crypto-related licensing. They include company registration, official documentation, and fee authority application fees, which can have remarkable variations depending on the jurisdiction.
- Initial Share Capital. In many cases, regulators will have a minimum amount of share capital as a reserve to compensate operating risks and client obligations. The reserve will provide some insight into being a financially viable company to both authorities and clients, which requires being in a local bank or a regulated custodian account. Without considering that it is reserved as insufficient does not impact licensing approval, you will have a hard time being approved.
- Additional and Recurrent Expenditures. Having a license entails recurring expenditures like yearly renewals, audits, notary fees, and continuous compliance monitoring. Therefore, for companies seeking to maintain uninterrupted compliance with regulators, investing in AML/KYC software and/or vetting staff, updating new and existing processes, and developing documentation for the future is also unavoidable.
Can you decrease these costs and still remain compliant? Yes, but whether or not you could remain compliant while decreasing costs depends heavily on the nature of your project(s) and your international target markets. There are jurisdictions globally that will incentivize young businesses and startups looking to expand or facilitate innovation in the blockchain world.
These incentives can also concern taxes, which are another considerable expense, especially in onshore and EU jurisdictions. A corporate consultant will know how to budget for your crypto exchange project properly and avoid undesired expenses.
How to License Your Crypto Exchange with a Legal Consultant?
First-time company owners resort to legal consultants because they can guide the company formation and licensing procedure from A to Z. Seasoned entrepreneurs, on the other hand, seek assistance with expanding their operations and scaling the business globally. LegalBison has an approach to both. With over 5 years of experience in crypto compliance consulting, the company curates incorporation and licensing for all kinds of blockchain projects.
Once you make the first call, the team gets back to you for a primary introduction of your business idea. Then, the legal professionals conduct a full assessment of the project and provide you with locations and options for incorporation and license obtainment. LegalBison draws a complete, step-by-step roadmap: once you approve it, the team contacts its local agent in your chosen jurisdiction, and the licensing process begins.
Conclusion
Although starting a crypto exchange can appear complicated, a compliance-first mindset can make licensing a competitive edge. Placing an emphasis on regulatory requirements builds trust with clients, partners, and banks while mitigating potential future costs associated with retroactive fixes or operational delays. Examples of this include company formation, satisfying capital requirements, implementing AML/KYC systems, and continuing through ongoing reporting, all of which can be done with careful planning.
Entrepreneurs who proactively apply for a license are better prepared to navigate jurisdictional nuances and develop a viable long-term business. Engaging experts can help create more efficiency and avoid wasted costs while ensuring full compliance starting on day one. Think about engaging a compliance consultant with licenses and experience within the crypto industry can assist with driving transparency, credibility, and future-proof compliance of your exchange while reducing legal exposure.
