How to Start a Cryptocurrency Business in 13 Steps

Here is what you need to know when starting your crypto business:

1. Choose your niche — The cryptocurrency sector has various niches, including cryptocurrency exchanges, mining, wallets, payment services, and ICO (Initial Coin Offering) consultancy. 
2. Technology infrastructure — Depending on your niche, the technological demands can be high. For example, if you are setting up an exchange, you’ll need a reliable trading platform that can handle high volumes and offer quick transaction times. 
3. Security — You will need robust security measures to protect your business from hacking, phishing, and other forms of cyber attacks. Implement strong security protocols and consider cybersecurity insurance.
4. Licenses and permits — The need for licenses and permits can vary significantly depending on the type of business you are operating and the jurisdictions in which you operate. Here are some common licensing and regulatory considerations for cryptocurrency businesses: Money Transmission Licenses, BitLicense, and registration with regulatory bodies such as the Securities and Exchange Commission (SEC).
5. Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
6. Legal business aspects — Register for taxes, open a business bank account, and get an EIN.
7. Learn from real experts:

Discover the innovative world of cryptocurrency taxation with Carl Gärdsell in our interview with him.

Step 1: Decide if the Business Is Right for You

Pros and cons

Before starting a cryptocurrency business, it’s important to consider the pros and cons.

Cryptocurrency industry trends

Industry size and growth

• Industry size and past growth – The global blockchain technology market was worth $5.9 billion at the end of 2021.((https://www.grandviewresearch.com/industry-analysis/blockchain-technology-market))
• Growth forecast – The global cryptocurrency market is expected to grow 60.2% annually through 2025.((https://www.mordorintelligence.com/industry-reports/cryptocurrency-market))

Trends and challenges

Trends within the cryptocurrency industry include:

• The skepticism around cryptocurrency is easing as processing companies like PayPal and Venmo allow crypto transactions on their platforms.
• Non-fungible tokens, or NFTs, are a new type of digital currency that’s on the rise. NFTs represent physical or digital artwork, domain names, and collectibles and are traded like other cryptocurrencies.

Challenges within the cryptocurrency industry include:

• Cryptocurrency platforms are under increased scrutiny due to a lack of regulation. Regulators are most concerned about a lack of consumer protection and insufficient guards against money laundering.
• Although crypto is becoming more mainstream, the currency itself is still a volatile investment. 

How much does it cost to start a cryptocurrency business?

Startup costs for a cryptocurrency business range from $8,800 to $20,200. The main costs include a computer outfitted with the latest hardware and software, as well as legal fees, marketing expenses, and app development. 

Legal consultation isn’t required, but is highly recommended to make sure you’re ready for ICO and other future regulatory requirements. If you are a skilled programmer, you can save costs by doing app development yourself.

Start-up Costs	Ballpark Range	Average
Licenses and permits	$100-$300	$200
Insurance	$100-$300	$200
Marketing and advertising	$1,000-$3,000	$2,000
Legal consultation	$2,000-$5,000	$3,500
Computer	$800-$1,600	$1,200
Software	$1,000-$2,000	$1,500
Website	$1,000-$3,000	$2,000
App Development	$2,000-$5,000	$3,500
Total	$8,000 - $20,200	$14,100

How much can you earn from a cryptocurrency business?

New cryptocurrencies work to raise capital prior to their ICO. This can take time and extensive networking to find investors, so companies often look for other ways to generate revenue. 

Some crypto firms develop platforms where users can trade currencies and play games to earn coins. They typically charge users a one-time fee or an annual subscription for access. If you’re working out of your home, your profit margin should be somewhere around 90%.

In your first year or two, you could attract 750 users to your platform and charge them each a $100 annual subscription fee, bringing in $75,000 in annual revenue. This would mean $68,000 in profit, assuming that 90% margin. 

As your brand gains recognition, you could attract 2,000 users per year and increase your annual fee to $125. At this stage, you’d hire additional staff and rent an office, reducing your profit margin to around 65%. With annual revenue of $250,000, you’d make a handsome profit of $163,000.

What barriers to entry are there?

There are a few barriers to entry when it comes to starting a cryptocurrency business. Your biggest hurdles will be:

• Raising capital for your ICO 
• Competition with established crypto players

Step 2: Hone Your Idea

Now that you know what’s involved in starting a cryptocurrency business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research cryptocurrency businesses in your area to examine their offerings, current value, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a cryptocurrency business with a focus on real estate.

This could jumpstart your word-of-mouth marketing and attract customers and investors right away. 

What? Determine your crypto products and offerings

You’ll be creating your own cryptocurrency and offering it to a target community within the niche you choose. Many cryptocurrency businesses also create games and virtual worlds where people can earn coins. You could also start a crypto YouTube channel or blog, grow your audience, and monetize your platform to bring in additional revenue. 

How much should you charge for cryptocurrency?

Cryptocurrency firms typically make most of their money from an ICO, which is similar to a standard company’s initial public offering (IPO), in which its stocks are made available for purchase on the market. An average starting price for new coins is around 10 cents, but you can set any price you choose. Once a coin hits the open market, the price will fluctuate. 

Many cryptocurrency businesses also charge fees to access their platforms and use their software and play games. These fees are typically charged on a one-time basis or annually and will depend on the services you provide. Your ongoing costs will be very low, so expect a profit margin of around 90%.

Once you know your costs, you can use our profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be the cryptocurrency investor community. Crypto investors range in age, but most are under 40. Focus your marketing efforts on social media platforms like TikTok, Instagram, and Facebook, and on crypto-related news outlets like cointelegraph. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Crypto Business Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “coin” or “crypto”, boosts SEO
• Name should allow for expansion, for ex: “The Crypto Collective” over “Ethereum Investments LLC” or “Bitcoin Trading Co.”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Cryptocurrency Business Plan

Here are the key components of a business plan:

• Executive Summary: A brief overview of the cryptocurrency business, summarizing its goals, mission, and key highlights.
• Business Overview: A detailed description of the cryptocurrency business, including its industry, target market, and unique value proposition.
• Product and Services: Clear delineation of the specific cryptocurrency products and services offered, emphasizing their features and benefits.
• Market Analysis: Examination of the target market for the cryptocurrency, identifying trends, opportunities, and potential challenges.
• Competitive Analysis: Evaluation of competitors in the cryptocurrency market, highlighting strengths, weaknesses, and strategies for differentiation.
• Sales and Marketing: Strategies for promoting and selling the cryptocurrency, encompassing marketing channels, sales tactics, and customer acquisition plans.
• Management Team: Introduction to the key individuals involved in the cryptocurrency business, emphasizing their skills, experience, and roles.
• Operations Plan: Explanation of the day-to-day processes and activities required to run the cryptocurrency business successfully.
• Financial Plan: A comprehensive overview of the financial aspects, including revenue projections, expense forecasts, and funding requirements.
• Appendix: Supplementary information such as charts, graphs, and additional details supporting the various components of the cryptocurrency business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to cryptocurrency. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your cryptocurrency business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a cryptocurrency business. Many successful cryptocurrencies also receive funding from venture capitalists and angel investors. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Licenses/Permits

Starting a crypto business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your cryptocurrency business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as OpenDAX, Tatum, or HollaEx to build a crypto exchange, integrate payment gateways, and develop custom apps.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

• Professional Branding — Ensure your branding reflects innovation, security, and reliability, key in the crypto industry, through your logo, website design, and marketing materials.
• Professional Website and SEO — Develop a website detailing your services, educational resources on cryptocurrency, and platform features, optimized for relevant search terms.
• Social Media Engagement — Use Twitter, LinkedIn, Reddit, Telegram, and Discord to share industry news, insights, and engage with the crypto community.
• Direct Outreach — Connect with potential clients and partners at industry networking events, crypto meetups, and conferences.
• Educational Content — Publish blog posts and guides on cryptocurrency trends, investment tips, and technology updates. Include video content to simplify complex concepts.
• Webinars and Online Courses — Offer educational webinars and courses tailored to crypto users at various levels of expertise.
• Cryptocurrency Workshops and Seminars — Host or sponsor events focused on educating about cryptocurrency and blockchain technology.
• Participation in Industry Events — Be active in crypto and fintech events as a sponsor, exhibitor, or speaker to raise your profile.
• Partnerships with Fintech Companies — Collaborate with fintech firms and financial institutions to expand your services and client base.
• Community Building — Foster a strong community through online forums and excellent customer support to cultivate a loyal user base.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your cryptocurrency business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your crypto business could be:

• Crypto investing with confidence
• Secured digital currency for the next generation
• Empowering the future of investing

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a cryptocurrency exchange, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working with blockchain technology for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in cryptocurrency. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a cryptocurrency business include:

• Software Engineer – Build applications, troubleshoot programs
• Product Manager – Design and launch crypto products
• Marketing Lead – Manage social media accounts, run advertising campaigns

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Cryptocurrency Business – Start Making Money!

Starting a cryptocurrency business requires a specialized skill set and a whole lot of hard work. But the industry is seeing rapid growth, which makes this an exciting time to get into crypto, as the possibilities to make great money are endless!

Now that you’ve gained the knowledge and insight needed to launch a successful business, it’s time to get out there and start the next big crypto venture.

FAQs

How do cryptocurrency businesses make money?

New cryptocurrencies raise capital for an initial coin offering (ICO). They also create platforms that users can access in exchange for a one-time fee or annual subscription. Raising money for an ICO takes time, so many companies find other ways to generate revenue in the meantime.

Are cryptocurrency businesses profitable?

Yes, cryptocurrency businesses can be very profitable. The key to success is making your platform and offering unique enough to stand out from the competition.

Where can I learn more about starting a crypto business?

Starting a crypto business takes a specialized skill set, especially within the areas of finance and technology. If you’re interested in taking a crypto business course, programs are available on platforms such as Udemy for under $100.

What are the key components of a successful marketing strategy for a cryptocurrency business?

Key components of a successful marketing strategy for a cryptocurrency business include identifying your target audience, developing a compelling brand identity and messaging, establishing a strong online presence, creating valuable content, partnering with influencers, and engaging with the cryptocurrency community.

How do I set up a cryptocurrency wallet for my business?

To set up a cryptocurrency wallet for your business, select a reputable wallet provider or software that supports your desired cryptocurrency. Evaluate options based on security, ease of use, and compatibility. Then, follow the provider’s instructions to create an account, generate a wallet address, and implement security measures like strong passwords and two-factor authentication.