July 29, 2025
The Ever-Shrinking Window of Regulatory Opportunity for Brokers
The Ever-Shrinking Window of Regulatory Opportunity for Brokers
Over the past decade, Zitadelle Advisory Group has closely observed an undeniable global trend: the tightening of financial regulations for brokers.
Not so long ago, launching a brokerage business was far more accessible. A determined entrepreneur could register a company in St. Vincent and the Grenadines, open a bank account in Europe, and start operations on a modest budget. While this came with inherent risks for clients—especially around capital safety—it allowed smaller players to enter the market.
Today, the regulatory landscape has changed beyond recognition.
From Offshore Flexibility to Tightened Oversight
In recent years, many regulated entities in Europe have exited their domestic markets by selling licenses and moving offshore. However, even popular offshore jurisdictions have tightened rules, raised costs, and introduced new barriers that favor larger, well-capitalized firms.
Here are just a few notable shifts:
Vanuatu – Once home to over 200 brokers, recent policy changes and higher government fees have reduced the number of active license holders to around 70.
Labuan (Malaysia) – Formerly a hotspot for Straight-Through Processing (STP) brokers, the jurisdiction has seen its Money Broker license lose appeal after a string of high-profile scams. Today, the Labuan Financial Services Authority (LFSA) increasingly encourages larger players to seek investment banking licenses, with capital requirements exceeding USD 2 million.
Seychelles – New rules now mandate higher minimum capital, stricter oversight, and genuine physical presence in the jurisdiction.
St. Vincent and the Grenadines – The FSA now requires brokers to hold an external license before approving companies to offer Forex/CFD services.
Belize – An early mover in tightening conditions, Belize’s IFSC raised annual broker license fees from USD 5,000 to USD 25,000 in a single increase.
The Rising Cost of Entry
Ten years ago, a broker could set up operations for around USD 18,000. Today, the same process can easily cost USD 30,000 or more—just for initial setup.
Ongoing costs are also climbing. Annual renewals, compliance obligations, local staffing, and physical office requirements have all added weight to operating budgets.
And these are just the regulatory costs. Operational budgets are a separate challenge. Based on reviewed financial statements from multiple start-up brokers, Zitadelle Advisory Group estimates:
A start-up with an existing client base or IB network now needs at least USD 2 million to sustain operations.
A start-up without an existing network will likely need USD 3.5 million or more to cover marketing, affiliate programs, and IB partnerships—with no guaranteed path to profitability.
Navigating the Narrowing Path Forward
The opportunity to enter the brokerage industry hasn’t disappeared—but the window is smaller, and the demands are higher.
At Zitadelle Advisory Group, we specialize in helping brokers navigate these challenges. From identifying the most strategic jurisdiction and structuring corporate entities, to assisting with platform setup, liquidity connections, and regulatory submissions, our goal is to position clients for long-term success.
Over the last decade, we have successfully completed more than 80 license applications for some of the largest brands in the market—spanning brokerage, payment services, and virtual asset providers.
For new entrants and established brokers alike, success in today’s environment requires foresight, planning, and the right partners. The era of quick and inexpensive setups is over—but with the right strategy, the opportunities are still there.