How to Get a Crypto Exchange License in 2025: Step-by-Step Guide

Getting a crypto exchange license isn’t just about filling out forms. It’s about building a business that regulators trust - and that means understanding exactly what’s required before you even start. In 2025, the rules haven’t gotten simpler. If anything, they’ve gotten stricter. The days of launching a crypto platform from your basement and hoping for the best are over. Regulators now expect full transparency, ironclad security, and real financial backing. If you’re serious about running a legal crypto exchange, here’s how to actually do it.

Understand What Type of License You Need

Not all crypto businesses need the same license. The type you need depends on what you’re doing. If you’re letting people trade Bitcoin for US dollars, you’re a money transmitter. That means you need a Money Transmitter License (MTL). If you’re only letting users trade crypto for crypto - say, BTC for ETH - you still need to register as a Money Service Business (MSB) with FinCEN, but you might not need a full MTL in every state.

But it gets more complicated. If your platform trades tokens that qualify as securities - like those issued through ICOs or tokenized stocks - you’re under the SEC’s watch. That means you need to comply with securities laws, possibly register as an Alternative Trading System (ATS), and work with FINRA. If you offer crypto futures or options, the CFTC steps in. And if you’re holding users’ crypto as a custodian or issuing stablecoins backed by real assets, you’ll need approval from state banking regulators or even the Office of the Comptroller of the Currency (OCC).

There’s no one-size-fits-all license. Your business model determines your regulators. Get this wrong, and you’re not just delayed - you’re at risk of fines, shutdowns, or criminal charges.

Start with Federal Registration: FinCEN MSB

Before you even think about state licenses, you must register with FinCEN as a Money Service Business. This isn’t optional. It’s the foundation of every legal crypto exchange in the U.S. You can’t skip it. Even if you’re based in a state with no specific crypto law, FinCEN still requires it.

To register, you’ll need to submit Form 107 (FinCEN Form 114) online. You’ll provide your business details, ownership structure, and a description of your services. You’ll also pay a one-time registration fee. But registration isn’t the end - it’s the start. Once registered, you’re legally required to have a written AML/CFT program. That means:

• Designating a compliance officer
• Training staff on spotting suspicious activity
• Keeping records of all transactions over $3,000
• Filing Suspicious Activity Reports (SARs) if you see red flags

FinCEN doesn’t just want paperwork. They want proof you’re actively monitoring for money laundering. If you’re not scanning transactions for links to sanctioned individuals or darknet markets, you’re already falling behind.

Meet State-Level Requirements - It’s Not the Same Everywhere

Federal registration gets you started. But if you want to serve customers in any state, you need state-level approval. And each state has its own rules.

New York is the toughest. If you serve even one resident of New York, you need a BitLicense from the NYDFS. That’s not just a form. It’s a multi-month process requiring:

• $500,000 in net worth or bonding
• Detailed cybersecurity policies
• Proof of consumer protection measures
• Regular audits by third parties

California doesn’t have a BitLicense, but it requires a minimum of $250,000 in financial reserves and strict KYC procedures. Texas and Florida are more flexible - they accept MTLs from other states under reciprocity agreements. But Illinois? You don’t need a license at all if you’re only trading crypto for crypto and never touch fiat.

This patchwork makes scaling hard. If you want to operate nationally, you’ll likely need licenses in 30+ states. That’s expensive. Most startups begin in one state - often Wyoming, Delaware, or New Hampshire - because they have clearer, faster licensing paths. Once you’re licensed in one state, you can use that as a base to open bank accounts and build trust before expanding.

Prove You Have the Money to Stay Open

Regulators don’t trust businesses that could vanish overnight. That’s why they require financial backing. The amount varies wildly:

• New York: $500,000 minimum net worth or surety bond
• California: $250,000 in liquid assets
• Some states: $100,000 with additional bonding

You can’t just say you have the money. You need audited financial statements, bank statements, and sometimes a letter from your bank confirming funds are available. If you’re using crypto as collateral, forget it. Regulators want cash or cash equivalents - U.S. Treasuries, FDIC-insured deposits, or surety bonds from approved providers.

Why? Because if your exchange gets hacked or your users panic and withdraw all at once, you need to be able to pay them back. That’s not a suggestion. It’s the law.

Build a Rock-Solid KYC and AML System

Your KYC (Know Your Customer) and AML (Anti-Money Laundering) systems aren’t just checkboxes. They’re your first line of defense against regulators, hackers, and criminals.

Here’s what you need:

• Identity verification for every user - government ID, selfie, and sometimes proof of address
• Screening against global sanctions lists (OFAC, UN, EU)
• Transaction monitoring software that flags unusual patterns (like rapid deposits followed by withdrawals to different wallets)
• Record keeping for at least five years
• Automated reporting tools that generate SARs when needed

Most successful exchanges use third-party providers like Trulioo, Jumio, or Sumsub. These services integrate with your platform and handle verification in real time. Don’t try to build this from scratch unless you have a team of compliance engineers. The cost of failure - fines, lawsuits, or criminal charges - is far higher than the cost of outsourcing.

Choose Your Jurisdiction Wisely

You can apply for a license anywhere - but where you choose matters. Onshore jurisdictions like the U.S., Japan, or the EU offer legitimacy. Banks will work with you. Investors will trust you. But the process takes 6-18 months and costs $100,000+.

Offshore jurisdictions like Malta, Singapore, or the Cayman Islands offer faster approvals - sometimes under 90 days - and lower costs. But banks in the U.S. and Europe may refuse to work with you. Your users might not trust you. And if you’re targeting American customers, a Cayman license won’t protect you from SEC enforcement.

Most smart operators use a hybrid approach: get licensed in a U.S. state with clear rules (like Wyoming), then use that as a foothold. Once you’re operational and have a track record, you can expand to other states or even apply for an international license to serve global clients.

Plan for Ongoing Compliance - It Never Ends

Getting the license is only the beginning. Regulators don’t give you a trophy and walk away. They check in.

You’ll need:

• Quarterly financial reports
• Annual audits by independent firms
• Updates to your AML program as new threats emerge
• Staff training every six months
• Regular cybersecurity penetration tests

One exchange in Florida got fined $2 million in 2024 because their KYC system didn’t update to screen for new sanctioned Russian addresses. That’s not rare. It’s common. Compliance isn’t a project. It’s a full-time job.

Get Legal Help - Don’t Try to Go It Alone

You don’t need to be a lawyer. But you do need one. Crypto regulation is too complex, too fast-moving, and too risky to wing it. Firms like LegalBison, Cooley, or Perkins Coie specialize in crypto compliance. They don’t just file paperwork. They help you structure your company correctly from day one - choosing the right legal entity, setting up your compliance team, and navigating state regulators.

A good crypto lawyer will save you hundreds of thousands in fines and delays. They’ll tell you which states to target first, what documents to prioritize, and how to avoid the traps that sink 80% of new exchanges. Don’t wait until you’re under investigation to call one. Hire them before you submit your first application.

What Happens If You Don’t Get Licensed?

Some operators think they can fly under the radar. They assume regulators won’t notice. That’s a dangerous myth.

In 2023, the SEC shut down three unlicensed crypto exchanges that had over $2 billion in user funds. In 2024, the DOJ prosecuted the founders of a New York-based platform for operating without an MTL - even though they claimed they were just a "tech company." Courts don’t care about your branding. They care about what you do.

If you operate without a license and serve U.S. customers, you risk:

• Fines of $1 million+ per violation
• Criminal charges for money laundering
• Asset seizures
• Permanent bans from the financial system

There’s no gray area anymore. If you’re moving money between crypto and fiat, you’re a financial institution. And financial institutions need licenses.