Key takeaways
- Choose your exchange model (spot, P2P, OTC, derivatives) before talking about features.
- For Indian users, FIU-IND registration, KYC and 1% TDS handling must be designed into the product.
- Liquidity is a business problem first and a technical one second.
- Most user funds should sit in cold storage, with tight limits on hot wallets.
Most crypto exchange projects that run late do so for non-technical reasons: a banking partner falls through, liquidity isn't arranged, or compliance requirements arrive halfway through the build. These twelve decisions, made early, prevent most of that.
1–3. Model, market and coins
1. Exchange model. Spot order-book exchange, P2P marketplace, OTC desk, or derivatives? Each has very different engineering and regulatory weight. P2P is the lightest to start; derivatives are the heaviest.
2. Target market. The country you serve decides your registration, tax handling and banking options. Building "for everyone" usually means building for no one well.
3. Coin and pair list. Start with a short list of liquid pairs. Every extra chain means another node or provider, deposit monitoring and withdrawal logic.
4–5. Compliance and tax (India)
4. Registration. If you serve Indian users, plan for FIU-IND. It acts as the single-point regulator for crypto exchanges under the PMLA, requiring mandatory registration, KYC compliance and reporting of suspicious transactions.
5. Tax handling. A 1% TDS applies to specified virtual digital asset transactions under Section 194S of the Income Tax Act, alongside a flat 30% tax on gains. Your platform needs to calculate, deduct and report this correctly, which affects the wallet and ledger design. This is general information; work with a qualified tax and legal advisor on the specifics.
6–7. KYC partner and banking
6. KYC provider. Choose a provider that supports Aadhaar-based and PAN verification, video KYC if needed, and sanctions screening. Integrating it early lets you design onboarding around it.
7. Fiat on-ramp. If users will deposit rupees, you need a bank or payment partner willing to work with a crypto business. Start this conversation on day one; it can take longer than the build.
8–9. Custody and wallet security
8. Custody model. Will you hold user funds (custodial) or let users trade from their own wallets? Custodial exchanges are easier to use but carry far greater security responsibility.
9. Hot and cold wallet policy. Keep most funds in cold storage, with multi-signature approval for moving them. Set clear limits on how much sits in hot wallets for daily withdrawals, and alert on unusual movement.
10. Liquidity
An exchange with empty order books loses users within days. Options include connecting to the liquidity of larger exchanges through APIs, working with market makers, or launching with a narrow set of pairs and incentives. Decide this before launch, not after.
11. White-label or custom build
A white-label exchange gets you to market in weeks and suits a test launch. A custom build gives you control over the matching engine, fees and features, and takes months. Many teams start with white-label and move to custom once volumes justify it.
12. Features for launch day
- Registration, KYC and two-factor authentication
- Spot trading with order book, market and limit orders
- Deposits, withdrawals with whitelisting, and transaction history
- Admin panel: user management, KYC review, fee settings, withdrawal approvals
- Reports for tax, compliance and accounting
- Responsive web app first; mobile apps once the core is stable
Frequently asked questions
Specialist pages from the Core I-Solutions family that cover this topic in more detail.