The suitable crypto license to set up a brokerage company is not easy, but also a fundamental choice for your business, which requires many parameters to be taken into account, including a set of regulatory procedures and compliance with national, public, and international regulations and requirements.
Component basis
A meaningful way to attract new clients is to build credibility and trust as a broker. What could be better than demonstrating your experience in analyzing market events? Traders have access to a considerable amount of information on the Internet. Your market understanding can overcome this informational obesity to provide actionable trading ideas.
Millennials and Generation Z make up the most significant number of traders today. These generations have high expectations for all service providers, including brokerages. They also value education, which empowers them to make their own decisions. Providing market information can be invaluable to brokers looking to attract and retain these traders.
But attracting new traders is only half the battle. Keeping them and motivating them to keep trading is a whole other game. Did you know that the cost of acquiring new customers is 7 times higher than retaining them? In addition, existing customers are 50% more likely to try a new product you launch. Most importantly, increasing customer retention by as little as 5% can improve your bottom line by 25% to 95%.
To keep traders, you need to keep them interested and motivated. Giving them regular updates on exciting trading opportunities can be a great motivator. You can even get an idea of what other traders are doing with the real-time market sentiment indicator.
Now you can consider doing market research and analysis in-house or opt for a more efficient way to outsource forex market analysis.
So, before you start planning and structuring your business, you need to consider which regulatory jurisdiction offers you the best options for running your business.
The forex market is growing daily, and numerous forex brokerages are becoming active and licensed in an increasingly regulated, competitive, and demanding environment. That is why each case must be appropriately analyzed, as one or more factors may play a decisive role.
Below we will go over the main criteria to consider when choosing the most suitable forex license for doing business:
Registration and maintenance fee
Costs vary by jurisdiction, and you may have very high prices in registering a new legal entity and the numerous procedures involved. Some jurisdictions are well known for their low fees and requirements, which means the registration process is more accessible and takes less time.
Brokerage forex licenses
While there are several offshore jurisdictions where forex brokerage firms are unregulated, the list is constantly shrinking, and many brokers have to decide whether to conduct a regulated business and which jurisdiction is best suited to their business needs.
A Forex broker license is quite expensive and takes time to obtain (from a few weeks to a year). However, you should be aware that doing business in an offshore jurisdiction where Forex is not regulated may be perceived negatively by your partners (investors, clients, and banks).
With a license, you can:
- provide any investment services, as well as hold and control Client Money or Client Assets;
- maximize profits through low or no corporate tax;
- work all over the world;
- ensure higher commission percentages per sale;
- obtain a license from leading regulatory bodies such as MFSA, FSP, and CySEC and therefore dominate the Forex market.
If you do not get a work permit, government agencies in different countries will recognize you as a scammer and block your platform. You may get into serious legal trouble and find it harder to attract investors. If you want your business to develop, you should work honestly and openly.
Stability of the political system
It is essential to ensure that the chosen country has a legal system, a transparent economic policy, and a stable currency without restrictions on the repatriation of investments. In addition, there should be no risk that a new government will come to power or that tax exemptions may be chosen under international political pressure or other political factors that may affect business.
Tax regime
Some offshore regimes have lower taxes, but some have a zero-tax status. However, tax exemption is only sometimes the decisive factor.
Blacklists – a list of jurisdictions that are considered not to cooperate globally in the large-scale fight against money laundering and terrorist financing. This list is regularly updated by the Financial Action Task Force (FATF).