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A perfect fit for our business

I highly recommend Legal to any entrepreneur or business seeking top-notch services for their company formation.

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Best for Crypto Licenses

Best company for Crypto Licenses! Kudos to the team for making the incorporation of our company really smooth

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Fast and Reliable

Quick set-up and straightforward process. It was a smooth process, we are happy to have chosen Rengang as our Partner for incorporations, globally.

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Highly recommended!

They are undoubtedly top-level experts when it comes to licensing and registrations in the crypto and web3 industry. Highly recommend!

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Excels at adapting to challenges

Rengang excels at adapting to challenges and demonstrates a perfect understanding of our business needs.

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A fruitful cooperation

As a result of the fruitful cooperation with Rengang, Yellow Card obtained a VASP registration, fast and without any legal complications.

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HOW DOES OUR EXPERT HELP YOU TO SUCCESSFULLY LAUNCH YOUR DEX

Examples of Rengang's assistance with decentralized exchanges

Rengang regularly assists clients with opening DEX platforms. Due to years of experience, we are able to define the best course of action for each individual project. In this section, we aim to demonstrate how exactly we put our knowledge of the matter into practice.

Assessing the legality of a DEX
As soon as Rengang is provided with all the project details, our FinTech lawyers start assessing it from multiple legal perspectives. The assessment includes the business model and services that a Decentralized Exchange intends to provide, their legality in the targeted markets, and the need for a license.

Once the estimation is done, Rengang can draft a legal opinion or memorandum that outlines the best approach to launching a DEX in a legally compliant way.

Crypto license for a DEX
Through the process of drafting a legal opinion, the experts might define that certain business models in the project are subject to licensing. In most cases, a Decentralized Exchange will require a crypto license, especially if its services are closely related to fiat (on-ramping).

Once the necessity arises, Rengang undertakes the administrative side of licensing a company, providing all the required documentation, and interacting with a regulator on the client’s behalf.

Banking assistance
There are two possible types of banking assistance that Rengang can provide: opening a bank account for the company itself and its corporate expenses and ensuring a banking gateway for clients’ transactions in fiat.

Due to the riskiness and increased volatility of the crypto market, most banks have second thoughts when it comes to working with crypto businesses. Rengang established a connection between a client and a bank, ensuring that all the banking needs of the client are met.

Ongoing legal support
In an ongoing partnership with Rengang, we will assist with all the legal matters such as incorporation and structuring. At the same time, if the lawyers assist your company with the license obtainment initially, they will stay by your side to provide prompt consultations and bridge any possible compliance gaps whenever needed.

LEGAL SERVICES FOR DECENTRALIZED EXCHANGES

Common services of DEXes and their regulation

A decentralized cryptocurrency exchange (DEX) is a peer-to-peer trading platform without any central authority to oversee and control the transactions. Instead, users trade cryptocurrencies through smart contracts.

Such a trading process is considered more individual and anonymous compared to trading on a CEX since all transactions go through on public blockchains, while the absence of a supervising body allows users to manage the custody of their funds.

The question that arises naturally is: how to legally structure a Decentralized Exchange?

Even for a decentralized platform, there are certain legal implications to be studied and possible requirements to be followed. As you read further, we will acquaint you with the building blocks of a decentralized exchange, explaining each not only from a legal but also a technical point of view.

Describing the business model
One might assume that if a DEX is not governed by anyone in particular and gives its customers free rein in trading operations, it will not need a legal permit. This is not necessarily true. Assessing the need for a license starts with defining the business model of your future startup.

While some decentralized exchanges are crypto-only, which means that they allow customers to connect their wallets and use cryptocurrencies for trading directly from there, others can offer more flexible solutions, such as on-ramping for the trading process. On-ramping involves exchanging fiat currencies for digital ones to further use them on a DEX.

The involvement of fiat in a Decentralized Exchange is a prerequisite for licensing in its own right.

Managing liquidity
Liquidity is an aspect of huge importance in the stability of a DEX. Since decentralized exchanges connect traders directly to liquidity pools, without stable liquidity, it would be impossible to perform successful trading operations. A good example of the importance of liquidity is on-ramp services: a Decentralized Exchange that offers on-ramping must be able to find the liquidity to provide all customers with crypto in exchange for fiat.

Multiple factors contribute to stable liquidity. It is often managed by ensuring a sufficient number of trading pairs supported by the platform. For this purpose, it is important to evaluate which crypto trading pairs are the most popular among customers. Besides, do not forget about market making, which is the concept of active selling and buying cryptocurrencies that helps provide and support liquidity. This process can be facilitated by using Automated Market Makers (AMMs), the decentralized protocols that rely on algorithms to ensure direct and effortless crypto trading and sufficient liquidity.

Connecting crypto wallets
Decentralized exchanges do not hold custody over their clients’ funds. Instead, traders connect their crypto wallets to the platform and use them directly for trading after obtaining an individual private key. The process usually takes less than a minute and does not require any additional information from the trader whatsoever. Once a user wants to trade cryptocurrency, the DEX connects them to a corresponding liquidity pool.

An important technical aspect of this process is connecting crypto wallets. As a future owner of a Decentralized Exchange, you must think in advance of the crypto wallets that your platform will support. As a rule, it would be wise to concentrate on the most widely used ones, the crypto wallets that have gained client trust around the world and in the country with your particular targeted market. For instance, you could consider Metamask, a wallet that is tremendously popular among seasoned crypto traders.

Forming a Decentralized Autonomous Organization (DAO)
If a Decentralized Exchange has no central authority, then who draws policies and makes changes? Most often, a Decentralized Autonomous Organization (DAO) is behind the decision-making process. A trading platform can either create its own DAO before launch or enter a partnership with an already existing DAO. In this way, it will obtain a decentralized legal structure based on a set of smart contracts, in which traders will participate by purchasing DAO’s governance tokens.

Legal Services in Decentralized Exchange (DEX)