Crypto Exchange Legal Services | Help You Set Up and Launch Your Own Crypto Exchange in India.
How do you decide the best way to set up your crypto exchange?
The Crypto industry is a billion-dollar in size and is growing leaps and bounds every day. Tech enthusiasts, blockchain developers, financial market regulators, traders and investors are closely watching the rise of cryptocurrencies across the world.
It's important to know the legalities behind launching a crypto exchange as the Government authorities closely look into each transaction involved in digital currencies to find if there's any AML/KYC violation as well as other financial crimes. To avoid being trapped in legal battles, it's critical that you know the ins and outs of the crypto exchange business with sound legal advice.
The Crypto market is very hot right now for serious revenue generation. Earlier you set up an exchange, better will be the returns.
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You’re much more likely to succeed with your cryptocurrency start-up venture by complying with all laws, regulations, and policies. In fact, sound legal paperwork in the jurisdiction you're planning to start and operate the exchange is paramount to avoid heavy penalties and reputational loss in case of any mishaps.
The Government of India had recently announced that it has constituted a special committee to look into the legalities and adoption of cryptocurrencies. Further, the press release said that the government is open to evaluating and exploring new technologies like cryptocurrencies for improving governance.
Entrepreneurs, startups and cryptocurrency traders make a common mistake of going fast without looking into the nitty-gritty of the legal requirements of the exchange. Failure to plan is the plan to fail in this complex, ever-evolving, and decentralised crypto domain.
Recent Legal Issues with Indian Crypto Exchanges
For example, it is worthwhile to learn from what happened to WazirX, one of the popular exchanges in India, who was recently caught in legal troubles due to poor handling of the AML/KYC process of their users. India's financial authorities issued a show-cause notice to the exchange after the investigation pointed out lapses and violations as per the FEMA provisions.
The statement alleged that the cryptocurrency exchange WazirX did not collect the requisite documents as mandated by the govt. regulations regarding anti-money laundering (AML) and combating the financing of terrorism.
A software engineer withdrew nearly 1.5 crores by taking advantage of a loophole in a Bangalore based Crypto Exchange which puts the common investors' money at huge financial risk. Not to forget about the huge legal liabilities on the crypto exchange.
In other words, never take proper procedures for granted. Follow all the protocols to the T. Talk to an expert cryptocurrency lawyer and seek their advice with all documentation, process, and paperwork. Let the experts handle the regulatory demands, while you focus on the business and technology aspects of the crypto exchange.
Your crypto exchange licensing and token offerings legal compliance checklist.
Cryptocurrency laws are rapidly evolving globally, so it is very important to either hire a full-time, in-house legal compliance team or outsource to reputable law firms in order to keep your exchange legal in all geographies where you will conduct business.
In many places, cryptocurrency exchanges operate without significant oversight, as government and regulation have not yet caught up with technology, while in other places including the US, Bitcoin operators must be licensed Money Transmitter businesses and must follow SEC and CFTC rules and regulations among others.
Establishing a Legal Entity
Our Crypto Lawyers will carefully understand your business requirements and help you decide on the right legal framework needed to get off the ground.
Drafting legal documentation
We can help you with all kinds of the drafting of key documents such as SAFT, PPM, Subscription Document, Legal Opinion Letter, Legal Offer, MoA, AoA, ICO PitchDeck, Anti-Money Laundering Policy, KYC Policy, and so on.
Setting up AML & KYC procedures
AML/KYC: Make sure that you implement the most stringent Anti-Money Laundering and Know Your Customer (KYC) processes on the exchange without any compromise. Indian authorities place a high emphasis on these processes to prevent financing of terrorism, money laundering activities, financial crimes, tax evasion, etc.
Transaction rate: Keep the transaction rate to the minimum to compete with several other crypto exchanges.
Crypto Security and Dispute Resolution
Cryptosecurity: Since cryptocurrencies are a high target for cybercrime and hacking, so plan and deploy strong cybersecurity protocols and authentication layers. Be sure your payment processor is PCI-compliant to safeguard your new enterprise against cyber threats.
Crypto Exchange must have adequate security measures in place and must be audited by Blockchain security experts on the following factors:
- SQL/HTML Injection
- XSS Attacks / Cross site scripting
- Remote File XSS attacks
- SSRF - Server Side Request Forgery
- File Inclusion (LFI /RFI)
- Directory Traversal
- Source code disclosure
- HTTP Parameter Pollution attack
- Hostile subdomain takeover
- CRLF injection
- Host Header Attack
- URL Redirection /Open Redirection
- Waf Bypassing
- LDAP Injection
- 2FC, KYC & AML.
Exchange Licensing and Regulations
Licensing needs: Get proper legal counsel to understand the various licensing requirements applicable to the jurisdictions where the exchange will operate. Proper licensing will need to be obtained in all jurisdictions in which the company plans to operate.
Liquidity: Crypto exchange depends on liquidity. Make sure you connect with other exchanges on the market for collaboration.
Ongoing legal support
Crypto Lawyers in Chennai, Bangalore: Hire a full-time legal counsel specialised in cryptocurrency and blockchain and maintain a legal team for ongoing compliances such as KYC policies, Anti-money laundering policies, etc.
Hard-pressed for time? Find a cryptocurrency exchange software solution provider. There are several white-label products available that may match your needs.
While these tips are not exhaustive, they should help you gain a better perspective about the crypto market and the legal, regulatory challenges ahead. Contact our expert cryptocurrency lawyers to craft an action plan in setting up your first crypto exchange.
Here's something we can all agree on: Cryptocurrencies are not just a fad anymore. They are here to stay and grow multi-fold in the next few years. In fact, the Indian government set up a special committee to look into the adoption of digital currencies goes to show that those who start early can become a strong leaders in the crypto space.
Talk to an Expert Crypto Lawyer today!
If you are planning to build your crypto exchange to tap into the billion-dollar crypto market, you'll need a strong legal team to provide timely help. Schedule a 15-min consulting session to understand various
legal compliances required to launch a cryptocurrency exchange in India.
