Software solutions for crypto-related business: Industry offers navigating

The explosive growth of cryptocurrencies over the past decade has sparked intense interest from investors, traders, and consumers globally. As digital assets continue to gain mainstream traction, many are considering how to establish companies to participate in this burgeoning industry. However, operating a business involving crypto assets comes with distinct legal and technical complexities tied directly to the unique nature of cryptocurrency systems. One critical area that new ventures must address is obtaining the necessary software solutions to support core business functions. In this article, we will explore recommended software infrastructure for two common crypto business models – exchanges and exchangers.

Main concepts

Cryptocurrency exchanges

To ensure purchasing, selling, or trading various digital currencies smoothly, exchanges must incorporate robust software tools for order management, trade execution, custody of assets, pricing data and analytics, security controls, and compliant KYC processes. Leading solutions offer capabilities such as:

  • Multi-signature wallet storage with detective controls against theft
  • Atomic swap technologies for instant trade settlement
  • Institutional-grade matching engines supporting high trade volumes with low latency
  • Graphical charting packages providing real-time and historical pricing data
  • Fraud monitoring, transaction screening, and suspicious activity reporting
  • Identity verification, blacklist checks, and customer due diligence tracking

By leveraging such feature-rich platforms, companies can rapidly launch sites allowing users worldwide to access high-liquidity crypto-to-crypto and crypto-to-fiat trading.

Cryptocurrency exchangers

In contrast to exchanges, cryptocurrency exchangers function as brokers, using their reserves to fill buy and sell orders directly with customers. Their software solutions focus on usability for rapid purchases using payment methods familiar to everyday consumers. Exchanger applications typically provide:

  • Simple purchasing workflows allowing buys via credit/debit cards, bank transfers, cash deposits, etc.
  • Quick settlement times measured in minutes, not days
  • Intuitive dashboards to track order status and historical transactions
  • Robust compliance protections including customer verification steps
  • High availability across user devices with mobile-friendly interfaces

By integrating user-friendly exchanger software, companies can offer customers a streamlined onboarding experience to exchange fiat for major cryptocurrencies like Bitcoin and Ethereum or stablecoins like USDT.

So, specialized software plays an instrumental role in launching and scaling cryptocurrency exchanges, exchangers, and other digital asset ventures. As the industry continues its ascent, leveraging robust solutions tailored to business models can help position companies for leadership. You should carefully evaluate their technology needs before moving forward.

Key points to consider regarding software licensing for a cryptocurrency business

  • Geographic restrictions. Some software licences may restrict use to certain geographic regions or jurisdictions. This is an important consideration for crypto companies, as regulations differ significantly across countries. Ensure the software can be deployed in target markets.
  • Access and audit rights. Regulators may require access or auditing of software systems to ensure security and compliance. Licences should allow for such oversight while protecting the intellectual property of vendors.
  • Escrow of source code. For core infrastructure software, consider requiring vendors to place source code into an independent third-party escrow account. This provides access to code if the vendor goes out of business.
  • Total cost of ownership. Evaluate the total multiyear cost, including licence fees, customization, maintenance, support costs, hardware expenditures, etc. Create projections to determine the complete budget impact.
  • Customization rights. Determine if licences permit changes to open-source or proprietary software when modifications are needed to meet unique business requirements.

As cryptocurrency software systems tend to be highly complex, conducting in-depth due diligence during licensing review is highly advisable before making major platform commitments and integrations. Consulting qualified legal and technical experts can help identify optimal solutions aligned with both short and long-term objectives.

Software licensing models for cryptocurrency ventures

As entrepreneurs build new cryptocurrency exchanges, wallet services, decentralised applications and other blockchain-based businesses, one of the first strategic decisions they need to make is choosing an appropriate software infrastructure to power their technology platforms. There are two main options: proprietary software delivered as a cloud service, or open-source software that can be downloaded and run on local servers. Each licensing model has unique legal and operational implications that startups need to consider.

Proprietary SaaS platforms licensing

Turnkey Software-as-a-Service (SaaS) solutions offer new businesses the ability to get to market quickly by leveraging complex existing code bases without having to build everything from scratch. Leading providers offer hosted exchange and wallet platforms with built-in security, scalability, and compliance features that are ready to use.

These proprietary solutions are typically offered via a subscription licence agreement that defines contractual rights and restrictions regarding access to the solution, ability to modify it, geographic terms of use, and limitations of liability. Cryptocurrency entrepreneurs should conduct due diligence to ensure that SaaS licensing models match long-term business requirements and geographic expansion plans before integrating these externally hosted software platforms.

Open-source solutions licensing

Unlike SaaS services, open-source software (OSS) provides free access to the underlying source code, allowing users greater visibility into the programming logic and customisation capabilities to refine functionality. OSS licences clearly specify distribution and modification rights, and articulate core principles about whether derivative works must remain open source or can become proprietary systems.

While open source offers greater flexibility, organisations that choose self-hosted OSS platforms take on more responsibility for managing maintenance, upgrades, and compliance requirements in-house. Management teams must weigh the ability to control against the complexity of managing OSS tools without turnkey support services.

By evaluating factors such as deployment speed, customisation requirements, control priorities, licensing terms and internal resource realities, leadership teams can determine optimal software infrastructure strategies. Proprietary SaaS solutions offer faster time-to-market, while open source offers ultimate flexibility — decide wisely based on the long-term goals of your cryptocurrency venture. Advice on developing licensing agreements for cryptocurrency-related software is a critical foundation on which to build success.

SaaS arrangements for cryptocurrency companies

As cryptocurrency startups seek to launch new wallets and other web-based services, many are opting to use complex Software-as-a-Service (SaaS) solutions rather than building custom platforms from scratch. While outsourcing key infrastructure to specialised providers allows for faster time-to-market, integrating these turnkey software systems into business operations requires carefully crafted SaaS licensing agreements.

Structuring SaaS agreements

SaaS tools are delivered on a subscription model, where users pay recurring fees to access remotely hosted software on a utility basis. Typical agreements define licence terms based on metrics such as number of users, processing volumes and specific feature sets enabled.

Given jurisdictional differences in legal standards, cryptocurrency executives should retain qualified local counsel when reviewing SaaS contracts to validate compliance obligations in target markets. Attorneys experienced in software licensing can negotiate terms that align with long-term growth projections and jurisdictional expansion plans in desired regions.

Key SaaS licence agreement provisions

Well-drafted SaaS contracts contain provisions that protect the interests of both the software vendor and the customer. Common components include:

  1. Rights of use - specifies authorised levels of access and restrictions on modifications.
  2. Service commitments - defines software update frequency, support response times, uptime guarantees, etc.
  3. Limitation of liability - limits the vendor's liability for errors, failures, data loss or other incidents.
  4. Confidentiality - requires data security safeguards and prohibits unauthorised use of data.
  5. Termination options - allows for the ability to terminate the agreement if necessary.

These agreements set expectations between the parties for the contracted SaaS engagement. Use qualified advises to review and negotiate SaaS terms to ensure optimal protection.

Roadmap: securing SaaS licensing for crypto firms

For entrepreneurs building crypto ventures on SaaS architectures, understanding licensing processes is essential. While specific requirements may vary across jurisdictions, the pathway typically involves core stages such as:

  • Researching regulations. The first step entails thoroughly studying applicable rules in target countries and regions to operate within appropriate legal guardrails as laws continue evolving. Experienced legal counsel can clarify nuances across locations.
  • Structuring the business entity. Founders must legally register corporate entities that meet each jurisdiction’s required business structure criteria for service providers in the region. This impacts licensing eligibility.
  • Finalizing key SaaS agreements. Well, in advance of accepting customer sign-ups, SaaS delivery contracts that clearly define subscription terms, usage rights, privacy protections and limitations of liability need to be instituted.
  • Preparing and submitting licence applications. Applications must demonstrate comprehensive compliance with all technical, security, bonding, and documentation related policy mandates across areas like AML, KYC, auditability and more. Qualified teams expedite approvals.
  • Administering licensing upkeep. After securing necessary licences, companies must remain in good standing by paying renewal fees, furnishing regulatory reports and demonstrating ongoing adherence to codes of conduct governing day-to-day SaaS operations.

Open source licensing for cryptocurrency ventures

As cryptocurrency startups build decentralized solutions, much leverage open-source software (OSS) components to accelerate development. OSS provides free access to source code, empowering teams to collaborate on better tools. However, various OSS licences have unique terms governing usage rights and distribution.

Understanding key licences is crucial when assembling crypto infrastructure. We’ll explore popular options:

GNU General Public Licence (GPL)

The GPL guarantees end users rights to use, inspect, modify, and redistribute software freely while requiring derivative works to stay open source. This viral nature ensures code enhancements flow back to strengthen projects long-term.

MIT Licence

Extremely permissive MIT terms allow nearly unlimited rights to use, copy, modify, publish, sublicense and distribute OSS with minimal constraints. Users can integrate MIT-licensed code into proprietary systems without requiring changes to stay open.

Apache Licence

Apache grants patent rights and trademark permissions with retention of notices. Slight constraints exist around redistribution if users modify source. Apache protects contributors and consumers effectively.

Mozilla Public Licence (MPL)

Taking a middle ground between reciprocal and permissive licensing, MPL permits users to customize source code for private systems but requires public, open distribution of any MPL-dervied additions or plugins back to core codebases.

BSD Licence

Allowing great freedom in reuse of software with few limitations, BSD enables proprietary modification and redistribution provided the BSD copyright header stays intact. The licence absolves authors of liability claims.

Constructing sturdy foundations

When evaluating software solutions for enabling core exchange functionality, leadership teams face choices between open source vs. proprietary systems, on-premise vs. cloud-hosted deployment, and more.

Navigating these decisions requires thorough diligence across dimensions spanning security, scalability, compliance, and budget. We’ll explore key considerations around open source licensing rules and typical software components powering modern exchanges.

Open-source cryptocurrency exchange licenses main points

Opting for open-source exchange software offers teams greater visibility into coded processes and the flexibility to customize platforms to unique requirements. However, integrating disparate open-source modules under the hood requires governing framework agreements clearly delineating licence terms for incorporated components.

Well-constructed agreements specify included software assets paired to corresponding licences and source access locations, so all participants understand associated rights and restrictions. Legal advisors help craft comprehensive contracts, agreeing to license terms while permitting modifications that must remain open sourced.

In sum, there should be clarified the next positions:

  • licence terms,
  • software copyright,
  • terms of use and distribution of the software,
  • software source code retention requirements,
  • responsibility for the presence or absence of antivirus software.

Typical exchange software suites powering robust order management, liquidity aggregation, security, reporting, and compliance include diverse modules handling functions like:

  • Matching engines: high-frequency trade execution.
  • Wallets: multi-signature cryptocurrency custody.
  • Analytics: real-time/historical data visualization.
  • KYC verification: customer onboarding processes.
  • Arbitration tools: dispute resolution protocols.

Teams can utilize open-source exchange software as a baseline foundation, then build additional proprietary layers tailored to launch requirements. Cloud hosting and dedicated support services simplify maintenance.

This table provides a structured summary of the information presented in the text, making it easier to compare the features and costs of the different licence options.

Crypto exchange software

Crypto exchanger software

  • Software installation takes on average from 5 to 10 days, considering the client’s requirements.
  • Integration with providers. Duration: 3-6 working days.
  • Includes SubSum integration, connection of a crypto liquidity provider and an acquirer.
  • When purchasing software through a SaaS licence, a monthly fee of 5,000 EUR will be charged.
  • Software installation takes on average from 5 to 10 days, considering the client’s requirements.
  • Integration with providers. Duration: 3-6 working days.

The cost of a SaaS licence is 95,000 EUR + 5,000 monthly.

The cost of an open-source licence is 120,000 EUR + 1000 per month (software support).

The cost of a software as a service licence is 45,000 EUR + 3,000 monthly.

The cost of the open-source licence is 58,000 EUR + 1000 per month.

The licence includes:

  • Accounting core.
  • Processing orders to buy and sell crypto assets.
  • Custom trading platform which includes:
  • Charts (graphs and other trading tools for analysis).
  • Forms for sending orders for execution.
  • A database with orders from all platform participants.
  • Basic info desk.
  • UX functionality with filters, analytics, and statistics.
  • Functionality for trading.
  • API functionality.
  • BTC, LTC, ETH, ERC20, 5 tokens of the customer’s choice, NEM, USDT, Ripple, Dash.
  • CRM system with analytics, events, bookmarks, leads, archive, agents, etc.
  • Multilingual platform.

The licence includes:

  • Accounting core.
  • User platform which includes:
  • Personal Area.
  • Admin panel.
  • Anti-fraud system.
  • Arbitration.
  • KYC module.
  • UI and UX functionality.
  • Account management.
  • Multi-language platform.
  • Commission accounting system.
  • Integration with crypto nodes.
  • Geo billing system.
  • Mobile application for App Store and Play Store.
  • API.

Whether you choose SaaS or customisable open-source systems, formal agreements that define licence terms, permitted uses, obligations, and modification rights are fundamental to protecting the interests of both software providers and customers.

Legal advice helps to decipher the nuances of licensing across proprietary, open-source and hybrid models to align with strategic technical and operational priorities in both the short and long term. The optimal approach balances upfront costs, development flexibility, customisation capabilities and service considerations related to internal management and third-party support.

YB Case specialists can answer your questions during a personal consultation on software for crypto business.

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