Even the biggest cryptocurrency exchanges face significant challenges when attempting to expand their services. Exchanges play a crucial role in driving cryptocurrency adoption around the world. The invention of Bitcoin and successive development and launching of different other cryptocurrencies have transformed the way we think about transacting globally. Traditional banking systems are no longer the only option available to people.
Blockchain and Cryptocurrency networks evade traditional banking systems, allowing people to transact directly without using the central institution. Ideally, users would transact peer-to-peer in a ciphering secure environment, but there are some barriers for those without technical expertise.
As a result, most crypto newbies convert their fiat currencies into their preferred cryptocurrencies through exchanges. The sheer number of exchanges operating internationally in 2020 offers users a plethora of options.
However, a handful of these exchanges are trying to establish themselves as global enterprises. What are their key challenges, and how have they built their empires?
How did these cryptocurrencies build their businesses?
As you can see, building a successful cryptocurrency exchange requires a tremendous number of resources and time, and also the ability to leap over hurdles at any time. It is even more challenging when you have to work across continents and borders since many countries have their policies and laws surrounding crypto and fiat currency transfer.
According to Jay Hao, OKEx’s CEO, several factors make for a complex and challenging business environment, meaning that “most CEOs in this industry don’t sleep much. Changpeng Zhao, popularly known as CZ, Binance’s CEO, stressed the importance of keeping a global mentality while maintaining a durable business system. CZ believes that exchanges need to understand the system and wants of users in different regions to keep that global mentality. There is a different approach for different markets, CZ says. Besides this, the need for investors to use the right trading app, including BitQT, cannot be ignored.
For a 24/7 crypto space, it is especially important to provide a solid infrastructure for users and always improve their experience, if we want to run a global business. We also have to organise people from different communities to provide custom services and products to the local people and ensure our marketing efforts reflects local custom, culture and language.
Ciara Sun, Huobi’s head of global business and markets, noted two major factors the exchange has focused on since its creation which include regulatory compliance and localization. To launch exchange support in new regions, Sun said having an understanding of the needs and wants of users is essential.
According to Sun, “Localization isn’t just about offering exchange in a new ethnicity. Each region and market have a different set of habits, preferences and requirements, therefore they had to cater to each user’s needs and provide local users with high-quality services and products.”
Sun explains that understanding the reasons why users in different regions and countries are interested in crypto can share some insights into the kinds of products that will work in those places. “We spend so much time learning bits and tricks of a new market before getting into it.”.
How to navigate the global waters
It is not an all-straightforward process to achieve global status in the cryptocurrency exchange industry, because of a lack of a centralized regulatory body that oversees the industry. Since cryptocurrencies have been around for more than a decade, regulation is very much in the hands of different countries and their internal laws.
Cryptocurrency exchanges have also had to face similar practices to that of most financial bodies which are subject to strict regulatory laws. These operations must adhere to Anti-Money Laundering and Know Your Customer guidelines to function freely.
Different cryptocurrency exchange representatives have explained how the global cryptocurrency market is complex. Running a cryptocurrency exchange is a highly technical, challenging and demanding undertaking in itself.
By launching exchange support in different regions, adds multiple layers of complexity that would need correct resources and effort.