What are the regulatory requirements for crypto exchanges?

Crypto exchange regulations vary significantly by country. In the US, exchanges must register with FinCEN as Money Services Businesses and comply with state money transmitter laws. The EU requires exchanges to follow MiCA (Markets in Crypto-Assets Regulation) standards, including customer verification and anti-money laundering checks. Most jurisdictions now mandate Know Your Customer (KYC) procedures, where users provide identity verification before trading. Exchanges must also implement security measures to protect customer funds and maintain transaction records. Some countries like El Salvador have minimal requirements, while others like China have banned crypto exchanges entirely. Reputable exchanges typically display their licenses and regulatory status on their websites. Compliance costs can be substantial, which is why many legitimate exchanges operate in regulated jurisdictions.