Starting a crypto exchange can be a profitable business venture, given the current popularity of the crypto industry. There are two approaches to building your own crypto exchange. You can choose to develop your trading platform from scratch, or you can choose a white-label solution.
Relying on white-label crypto exchange software is ideal for those looking to offer access to digital assets because of the low startup costs and faster time to market. Nonetheless, you should fully consider this option before making a decision.
In this guide, we’ll discuss the cost of building a white-label crypto exchange platform and why it may fit with your business plan.
What Is White-Label Crypto Exchange Software?
White-label crypto exchange software allows businesses to brand and market crypto exchange offerings as their own. The software developer owns the rights to the software and acts as a third-party provider, while the business markets those offerings to its customer base.
It’s important to note that this doesn’t mean you own the software solution. To put it simply, you only own your crypto exchange —, not the software that allows it to function.
Depending on the white-label provider, they’ll give you carte blanche or complete freedom to customize their software any way you see fit.
Generally speaking, you build on top of the white-label crypto platform. You don’t have to develop or design anything from scratch or set up your own blockchain technology; the technological foundation is already established.
Why Businesses Use White-Label Crypto Exchange Software
There are many reasons why businesses opt for white-label crypto exchange software, including:
Faster Time to Market
One of the principal benefits of a white-label crypto exchange is that you can bring your product to market faster than the custom route. With this solution, you’re simply building on top of an existing technological infrastructure.
If you choose to develop your own crypto platform, you’ll have to hire a crypto exchange development team and spend months iterating on the final product. This timeframe doesn’t include beta testing, which can take several weeks to complete.
White-label crypto exchanges allow for fast development time cycles over custom solutions.
Reduced Risk
When you’re building software from scratch, there’s always a chance that it could suddenly fail at any given point. If your development team misses a crucial detail or forgets to install a critical patch, your business operations could come to a halt due to system failure.
Established companies offering white-label crypto exchange software invest tremendously in comprehensive system maintenance. As such, you can rest assured that your technology will regularly achieve peak performance.
Security
If you build your own crypto exchange, you have to factor in the burden of developing rigid security protocols to keep user data secure. Depending on where you live, the crypto industry is becoming tightly regulated to keep investors safe from fraud and crypto market manipulation.
If you ignore vital security protocols like Know Your Customer (KYC), Anti-Money Laundering (AML), and multi-factor authentication (MFA), you can ultimately damage your reputation and be subject to regulatory penalties.
White-label crypto exchanges have these security protocols already in place, giving you the peace of mind of focusing mainly on your platform’s launch.
Customization
Custom software does have wide-reaching development capabilities, which may attract organizations wanting to build custom crypto solutions. Still, modern white-label crypto solutions are beginning to offer advanced functionality in regards to customization.
The best white-label crypto software appeals to businesses with beginner and experienced development teams. This means their software is simple enough for beginners to customize and advanced enough for experienced developers to make more modifications to provide more robust offerings for customers.
Cost-efficiency
Not only does custom software take a lot of time to develop, but these ventures are also expensive. The average cost to build custom software from scratch can exceed millions of dollars. If you’re planning a large venture, expect to pay more. For example, a large bank may pay upward of $10 million or more.
Purchasing white-label crypto exchange software is almost always more cost-effective. In addition to paying lower startup costs, your white-label provider will likely arrange a monthly subscription fee.
Scalability
Custom software can be difficult to scale, mainly because it’s designed primarily for your business in the present. As your business grows, your software will become outdated and need a complete rebuild to maintain functionality.
White-label crypto software scales to meet any of your business needs. Since you’re using established software, you can easily add more features to your platforms without hiring more developers.
What Is The Estimated Cost of Using White-Label Crypto Exchange Software?
The cost of using white-label crypto exchange software can vary depending on your requested level of functionality and the scope of your project. Estimated costs can vary greatly depending on the profit-sharing model and complexity of the solution, but some subscriptions exceed hundreds of thousands of dollars per month.
The exact price will depend on your arrangement and license with the white-label partner.
Nevertheless, a white-label product is a sound investment because it’s a battle-tested system that has been built, used, and tested for many years. This is an invaluable benefit next to a custom solution that has never been used in the real world.
Factors That Influence the Cost of a White-Label Crypto Exchange
Not all white-label crypto exchanges are created equal. If you’re wondering how much you will pay for this software, here are the primary factors that will influence the final bill.
Features and Functionality
This is perhaps the most significant driver of white-label software costs. The more sophisticated the white-label software, the more you can expect to pay for it. Many high-quality white-label providers make it possible to build premium products within a few weeks.
As such, they are naturally more expensive than white-label providers with basic or below-average features.
Trading Engine Complexity
The trading engine is the nucleus of a crypto exchange. This system component controls order management, order book updates, and trade matching algorithms. Generally speaking, this means that the cryptocurrency trading engine is responsible for:
- Processing buying and selling requests
- Matching these requests simultaneously
- Updating the order book in real time
- Tracking balances and positions
- Providing market data feeds (Book,L1/L2,Ticker)
- Keeping and providing order and trade histories
White-label providers with basic trading engines are almost always cheaper than companies with more sophisticated models. For example, trading engines for spot trading are usually cheaper than advanced engines with margin trading, derivatives, and complex order types.
Level of Customization
The level of customization you require for branding, advanced features, and workflow influences will also influence the final price. If you rely mostly on the crypto platform’s main functionality, you won’t pay as much as someone needing complex customizations.
Still, a white-label crypto exchange may have several customization options available that are simple to integrate. This means you build on top of a proven system instead of building from scratch.
User Interface
The user interface (UI), or front end, is how the end user will interact with your product. Whether you use a custom solution or a white-label partner, it’s important to design a user-friendly interface for your cryptocurrency exchange platform.
The complexity of your user interface can affect the total cost of your white-label license. For example, if you’re adding multiple complex features to the back end of your product, you’ll need to ensure that they’re easily accessible from the UI.
As such, you’ll have to spend more time and money creating an extensive UI with convenient navigation and eye-popping aesthetics.
Security Measures
Many white-label crypto exchanges come pre-packaged with basic security protocols. However, if you operate in a jurisdiction with tight crypto regulations, you’ll have to invest highly in additional security features to maintain compliance.
For example, Canada requires anyone or business that operates a crypto trading platform to register with a provincial or territorial securities regulator. Upon their review, your exchange could be subject to securities regulation.
In this case, you may have to adapt your platform to meet Canada’s regulations and avoid penalties from your jurisdiction’s regulatory body.
Compliance and Legal Requirements
Some crypto exchanges operate in limited jurisdictions because of crypto regulations. For example, Binance is banned in Canada because of the country’s financial trading restrictions.
If you’re building a white-label crypto exchange, you have to be mindful of the legal requirements for every jurisdiction you plan on operating in.
If you encounter strict compliance regulations in a specific jurisdiction, you’ll have to adapt your platform accordingly and pay the price.
Integration of Third-Party Services
The integration of third-party services, such as payment gateways, crypto wallets, liquidity pools, and data analytics tools, can add to the cost of a white-label crypto exchange. While some white-label partners offer native third-party integrations, these may not always suit your needs.
For example, say you require specific integrations for a specific cryptocurrency wallet. Your development company will have to create them from scratch using APIs and SDKs, both of which can drive up the costs of your project.
Multi-currency Support
As a general rule, the more currencies you support, the more expensive your decentralized trading platform will be in the long run. As a result, many exchanges only deal in certain cryptocurrencies and fiat currencies like Bitcoin (BTC) and Ethereum (ETH)
If you want to stand out and offer wide-reaching support across the crypto ecosystem, then be prepared to pay for it because:
- Higher wallet and custody costs will become necessary.
- Running more markets means higher bandwidth requirements to serve market data and trading capabilities on all products and markets.
- You’ll need higher data storage requirements to account for order/trade histories, as well as balance and position tracking.
Support and Business Expertise After Launch
All software requires continual maintenance and support after its launch. White-label crypto software is no different. The amount of support you need will undoubtedly increase the monthly costs of your software.
Fortunately, white-label providers like AlphaPoint offer extensive support and crypto exchange business expertise after the launch of your exchange without breaking the bank. With AlphaPoint, your business can leverage our expertise throughout every stage of the process — from advisory to launch to enterprise-wide adoption and beyond.
Build Your Crypto Exchange Seamlessly With AlphaPoint
Overall, building a crypto exchange with a white-label partner offers tremendous benefits for investors. They can avoid expensive startup costs, long waiting times, and tedious maintenance protocols.
Instead, they can build a functional exchange on top of a dynamic digital asset infrastructure. If you’re ready to see how white-label cryptocurrency exchange software can elevate your crypto offerings, consider AlphaPoint. Our white-label turnkey crypto solutions can help you plan, launch, and run a successful exchange with the support of our team of experts.
Request a demo today to see how we can bring your venture to the cryptocurrency market.
