The 6 Challenges You're Likely to Face Building Your Crypto Exchange

Even if you know the market inside out, have read everything available, planned every step, validated your idea, and are ready to risk your money and time — it’s still not enough. Beyond resources, knowledge, and strong soft skills, you’ll face an enormous amount of work and countless variables that you’ll only discover along the way.

I’ve gone through this journey with my exchange — from idea to launch — and in this article, I want to share six challenges specific to crypto founders. This industry is reshaping the very paradigm of ownership, finance, and governance, yet it operates in a low-trust environment with no established models for success. Finding a way to navigate this environment is not always easy.

Security First

If you are developing a crypto project, it is important to remember that cryptocurrency transactions are irreversible. Unlike traditional banking, if your funds are stolen, no one can freeze the transaction, no regulator will step in, and no insurance company will cover your losses. Once it’s gone, it’s gone.

Recently, one of the largest hacks in cryptocurrency history occurred: Bybit lost $1.5 billion.  Even by crypto market standards, that’s an enormous amount. North Korean hackers exploited vulnerabilities in the exchange’s security, which relied on third-party wallet providers instead of developing an in-house solution. This proves that even the largest players aren’t immune to catastrophic mistakes.

These incidents happen all the time. Ronin Bridge (Axie Infinity) lost​ $625 million, Poly Network lost $611 million, and FTX suffered a $400 million exploit after its collapse.

What’s even more surprising is that billion-dollar projects keep making the same mistakes — storing too many assets in hot wallets, relying on third-party solutions without control, or overlooking internal security risks. Then a hack happens, and users panic, rushing to withdraw their funds because trust in crypto is fragile.

Every crypto project operates with the understanding that an attack is not a question of if but when. Someone will probe your code for vulnerabilities, attempt to bribe employees or use social engineering tactics to gain access. Even if your smart contracts are flawless, the human factor is always there.

This isn’t just a challenge for individual projects — it’s a fundamental aspect of the crypto industry itself.

The whole system is built on the principle that individuals control their own assets. This is both its greatest strength and its biggest weakness.

One more thing: knowing that security matters is not enough. Every crypto project needsa clear plan for how security is enforced. Who controls the keys? What is the policy for validating multisignature withdrawals? How is access structured? This isn’t an abstract concept — it’s an operational reality. Will you use a custodian or build your own solution? If something goes wrong, is there a response plan that’s actually feasible with your available resources?

Crypto projects don’t fail because founders don’t want security. They fail because security wasn’t built into the foundation from the very beginning.

Team and Technical Complexity

Crypto projects are challenging not just because of technology or regulations but because very few people actually know how to build them. The industry is full of enthusiasts, but true experts capable of delivering complex technical solutions are rare. And without a strong team, even the best idea won’t be executed as you envision it.

One of the biggest hurdles is that you can’t just post a job opening and wait for the right candidates to apply — it doesn’t work like that. The best specialists aren’t actively looking for jobs; you have to find and recruit them yourself. In my case, I was reaching out to people directly — searching for the right resumes, messaging candidates, and pitching the project. That’s how I managed to hire a highly skilled CTO with experience in building a derivative exchange. If I had just posted a vacancy, I doubt someone of his caliber would have applied.

Of course, hiring top talent is expensive. Salaries for strong technical specialists are on par with Silicon Valley standards — $250K per year is the norm. But even if you have the budget, that doesn’t mean you can assemble a solid team quickly.

Another challenge is thatbuilding an MVP in crypto is often much harder than in other industries. In a typical startup, you can release a minimal product, test hypotheses, and iterate. In crypto, that’s rarely an option. For example, when launching an exchange, you can’t just build a simplified version with only basic functionality — certain core components must be in place from day one, or the product simply won’t function.

Here’s what we had to develop for exchange right from the start:

• Matching engine (the core system that processes orders)
• Trading terminal and UI (so users can execute trades)
• Position manager (for handling derivatives positions)
• Frontend for both web and mobile
• MiniApp in Telegram (for quick mobile access)

Initially, I didn’t even plan to build an exchange from scratch — I wanted to buy a ready-made solution. There were a few companies offering such systems, but the software quality was so bad that I basically wasted money on something completely unusable. In the end, we decided to build everything ourselves.

AML and KYC

If you're launching a crypto project involving asset exchange — an exchange, a swap service, or even a lending platform — you’ll have to deal with AML (Anti-Money Laundering) compliance. This isn’t just a regulatory formality; it’s a fundamental necessity. The crypto you receive might be stolen, come from darknet markets, or even be tied to criminal activity.

All major players in the industry conduct transaction monitoring. Exchanges and swap services use blockchain analytics providers that assess the risk level of each incoming transaction. These services track the origin of funds and assign a risk profile to transactions. If the risk is too high, the funds may be frozen or returned to the sender.

Ignoring AML checks inevitably turns a project into a money-laundering hub. While crypto operates without centralized oversight, that doesn’t mean the market is lawless. Every major exchange and compliant service has already integrated these mechanisms. If a platform isn’t conducting AML screenings, it’s either extremely unreliable — or is knowingly operating in a legal gray area.

Trend Cycles and Timing

In crypto, catching the right trend is almost half the battle. The market moves in cycles every year or two, and if your product launches at the right time, it can take off rapidly.

Recent trend examples:

• ICO boom (2017-2018) – projects raised millions based on an idea alone.

• DeFi revolution (2020) – decentralized finance gained mass adoption.

• NFT boom (2021) – digital art and collectibles captured mainstream attention, bringing in record-breaking sales.

• Metaverse and Play-to-Earn (2021) – many believed this was the future of Web3.

• Meme coins (2023-2024) – highly volatile tokens with little utility but strong speculative appeal.

  
  

Trends shift, and when they fade, liquidity dries up, trading volumes drop, and user interest declines. Right now, for example, meme coins are losing popularity, DEX volumes on Solana — the main chain for memes — are shrinking, and user activity is slowing down.

If you enter a market after a trend has peaked, attracting users becomes much harder. When hype is on your side, projects grow effortlessly — people buy tokens and engage with platforms simply because the market is on fire. But if you launch too late, you’ll have to spend much more on marketing, liquidity incentives, and community-building.

By the way, the same applies to raising venture capital. Investors follow trends too, and if you’re in the right niche at the right time, securing funding becomes much easier.

The goal isn’t to predict trends but to catch them fast enough. The key question every founder should ask is: can you build fast enough? If you don’t have the resources or technical ability to launch quickly, the market may have already moved on by the time your product is ready.

If I were starting today, I wouldn’t launch a derivatives exchange — that trend has passed, and attracting users would be much harder. In crypto, timing isn’t just important—it can make or break your project.

Markets and Regulations

It used to be possible to launch a crypto project without worrying too much about legal details. That’s no longer the case — regulations are tightening, and they need to be considered from day one.

It’s important to understand not just the requirements in your country of incorporation but also where your users are coming from. In some countries, crypto is outright banned, while others require licenses (for example, in the U.S., you can’t offer your product without one). This directly affects entry barriers — the stricter the regulations, the harder it is to launch, and in some cases, operating in certain markets becomes impossible.

Liquidity Management

For exchanges and swap services, liquidity is everything. If you don’t have liquidity, you don’t have a functioning product. Users need to be able to execute trades instantly — otherwise, there’s no reason for them to stay on your platform.

A new exchange won’t have liquidity from day one. No one wants to trade where the order book is empty. That’s why you need to decide early on how you’re going to source it. There are two main options:

• Market makers – professional liquidity providers that place buy and sell orders.

• Partnerships with larger exchanges – integrating external liquidity, like we did with Bybit, so the order book stays full and users can trade without delays.

  
  

Most exchanges use a combination of both, because there’s no other way to start. Even if you list ten different trading pairs, it doesn’t mean there will always be active buyers and sellers. Without an external liquidity source, the order book simply won’t fill up.

At the same time, you have to think about how to attract users. This typically involves either paid marketing (ads, influencers) or partnership-driven strategies — referral programs, B2B collaborations with bigger platforms. In B2C, things like educational content, discounts, and special conditions for early adopters also help. These aren’t just about acquiring users but also about keeping them engaged once you have liquidity in place.

Conclusion

In crypto, mistakes in fundamental areas can cost you your entire business. This isn’t an industry where you can just "launch and see how it goes." I learned this firsthand while building Biqutex — liquidity, security, and regulations took up an enormous amount of time, but there was no way around it. We had to figure out how to source liquidity, navigate compliance, and build a secure infrastructure from day one. Skipping any of these steps would have made the project unsustainable.

FTX managed billions in assets, but fraud with reserves combined with regulatory issues led to its instant downfall. Terra built a multi-billion dollar ecosystem, but a flaw in the minting mechanism UST stablecoin’s wiped it out in a matter of days. These failures weren’t just about bad luck — they were the result of ignoring critical industry risks.

Launching a crypto project means tackling these challenges head-on from day one. It’s not easy, but without a solid strategy for handling liquidity, security, and compliance, you simply won’t survive long enough to scale.