Where to Set Up a Cryptocurrency Exchange – Part 4: Establishing an Exchange in the Americas

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Setting up a cryptocurrency exchange is a complex, multi-jurisdictional decision that hinges on regulatory clarity, tax efficiency, banking accessibility, and long-term operational sustainability. In this final installment of our series, we explore key jurisdictions across the Americas—Bermuda, Canada, Mexico, and offshore Caribbean hubs—offering a strategic roadmap for founders aiming to launch compliant, scalable, and globally competitive digital asset platforms.

Bermuda: A Regulated Gateway for Global Crypto Exchanges

Bermuda has emerged as a leading jurisdiction for regulated digital asset businesses, combining political stability, advanced financial infrastructure, and forward-thinking legislation. As a tax-neutral territory with no corporate or personal income tax, it appeals to operators seeking both compliance and fiscal efficiency.

The cornerstone of Bermuda’s regulatory framework is the Digital Asset Business Act (DABA), which came into effect in September 2018. DABA regulates centralized crypto exchanges, custodial wallet providers, and other digital asset service providers—including brokers, dealers, and market makers—under the oversight of the Bermuda Monetary Authority (BMA).

Under DABA, two types of licenses are available:

To qualify, an exchange must have its headquarters and effective management based in Bermuda and appoint a local representative responsible for regulatory reporting. The BMA conducts rigorous due diligence on:

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Additionally, exchanges must maintain a minimum net worth of $100,000 USD, carry appropriate insurance, conduct internal audits, and meet any further requirements based on operational scale and complexity.

It’s important to note that ancillary services may trigger additional licensing:

With its strong legal foundation and reputation as an insurance and fintech hub, Bermuda offers unmatched regulatory certainty—ideal for exchanges targeting institutional investors and global markets.

Canada: Stable Market with Evolving Crypto Regulations

Canada presents a mature, stable environment for cryptocurrency ventures, particularly those targeting North American users. The country regulates crypto exchanges as Money Service Businesses (MSBs) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

All exchanges operating in or serving Canadian residents—whether domestic or foreign—must register with FINTRAC (Financial Transactions and Reports Analysis Centre of Canada). Key compliance obligations include:

While federal amendments have been passed, some secondary regulations remain pending. However, Quebec has taken an early lead, requiring exchanges active in the province to register with the Autorité des marchés financiers (AMF) and obtain MSB licensing.

From a tax perspective, Canada imposes a relatively high burden:

Despite these costs, establishing a presence in Canada enhances credibility, improves access to banking partners, and signals commitment to compliance—critical advantages in building user trust.

Mexico: Latin America’s Emerging Crypto Hub

Mexico’s Fintech Law, enacted in March 2018, marks a significant step toward formalizing digital finance. Under this framework, crypto exchanges are classified as Financial Technology Institutions (ITFs) and must be authorized by the National Banking and Securities Commission (CNBV).

To gain approval, ITFs must demonstrate:

Once licensed, ITFs can legally hold both fiat and crypto assets for clients and facilitate exchange services. However, there’s a critical caveat: the Bank of Mexico retains authority to approve which cryptocurrencies can be traded—potentially limiting innovation or token diversity.

Transactions exceeding approximately $2,800 USD must be reported under anti-money laundering laws. While the core law is active, many implementing regulations are still pending. Notably, a transitional provision allows new exchanges to operate for up to 12 months without full authorization, provided they apply within a specified window after secondary rules are published.

Corporate structures like SRL (LLC) or S.A. (corporation) are permitted with no restrictions on foreign ownership. Tax-wise, Mexico applies a flat 30% corporate income tax rate on profits and capital gains, along with substantial payroll and withholding taxes.

For teams targeting Spanish-speaking Latin American markets, Mexico offers strong infrastructure and first-mover advantage—especially as regional regulation evolves.

Offshore Crypto Exchanges: Speed vs. Sustainability

Traditional offshore jurisdictions like the British Virgin Islands, Cayman Islands, Belize, and St. Vincent & the Grenadines host numerous unregulated exchanges due to their business-friendly environments and tax neutrality.

These locations enable rapid launch with minimal red tape—ideal for early-stage projects prioritizing speed over compliance. However, significant challenges persist:

Exchanges claiming exemption from KYC because they only support crypto-to-crypto trading expose themselves to serious liabilities:

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Moreover, serving users in regulated markets often requires adherence to local rules—even if the exchange is offshore. Many successful platforms mitigate risk by partnering with licensed financial institutions to handle fiat operations.

While fully unregulated models may work short-term, long-term viability increasingly depends on adopting strong self-regulation and preparing for future licensing.

Frequently Asked Questions (FAQ)

Q: Is it legal to operate an unregulated crypto exchange from an offshore jurisdiction?
A: While incorporation may be legal, offering services to users in regulated countries often triggers compliance obligations. Ignoring KYC/AML can lead to enforcement actions globally.

Q: Can I use a Mexican ITF license to serve other Latin American countries?
A: The license only grants authority within Mexico. Expansion into other countries requires separate compliance with local regulations.

Q: Does Bermuda require physical office space for crypto exchanges?
A: Yes—effective management and headquarters must be locally based, implying real operational presence beyond mere registration.

Q: Are capital gains from crypto trading taxed in Canada?
A: Yes—50% of capital gains are included in taxable income and subject to corporate or personal tax rates.

Q: Will my offshore exchange get banned if I don’t implement KYC?
A: Major wallets, block explorers, and compliant platforms may blacklist or delist services deemed high-risk due to lack of KYC.

Q: Can I start trading before receiving full regulatory approval in Mexico?
A: Yes—under transitional rules, you may operate for up to 12 months while your application is processed after secondary regulations are issued.

Final Considerations

Choosing where to establish your exchange depends on your target market, compliance appetite, technical capabilities, and long-term vision.

Bermuda stands out for regulated global operations, Canada offers access to a high-trust North American market, Mexico opens doors to Latin America, while offshore options provide speed-to-market—but with growing sustainability concerns.

👉 Explore how leading exchanges navigate regulatory landscapes worldwide

Regardless of jurisdiction, success increasingly hinges on balancing innovation with compliance. As regulators tighten oversight, exchanges that proactively adopt best practices in KYC, AML, cybersecurity, and financial transparency will dominate the next era of digital finance.

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