The Critical First 100 Users Phase
Landing my first 100 users is an exciting milestone for any trading platform. But it's also when I transition from theory to reality—and when legal compliance becomes absolutely critical.
This is the phase where mistakes are most common and most dangerous. I'm moving fast, learning from user feedback, and iterating rapidly. But I can't let speed compromise compliance. A single misstep with early users can create liability that follows me for years.
⚠ Early Users = Highest Risk
My first users are often friends, beta testers, or early adopters willing to tolerate bugs. But "beta" status doesn't exempt me from regulatory obligations. If anything, regulators scrutinize early-stage operations more closely because systems and controls aren't mature yet.
This checklist covers the essential legal requirements I need in place before onboarding my first 100 users, and what I need to monitor as I scale.
Terms of Service Essentials
Even with just 10 users, I need proper Terms of Service. This isn't optional.
What My Early-Stage ToS Must Include
- Clear service description - What my platform does and doesn't do
- Beta/testing disclaimers - If I'm still in beta, say so explicitly
- Risk disclosures - Trading involves risk of loss, spelled out clearly
- No investment advice disclaimer - Unless I'm registered as an RIA
- Limitation of liability - Cap my exposure to trading losses
- User eligibility requirements - Age, jurisdiction, sophistication
- Account termination rights - My ability to close accounts
- Arbitration clause - Avoid costly jury trials
💡 Version Control from Day One
Track which version of my ToS each user accepted and when. Use versioning like "v1.0 - Nov 2025" and store acceptance records. If I ever face a dispute, I need to prove exactly what terms that user agreed to.
Beta Testing Language
If I'm operating in beta or testing mode, I need specific disclaimers:
Sample: Beta Disclaimer
BETA SERVICE NOTICE: The Platform is currently in beta testing. Features may change, be discontinued, or contain errors. System uptime and performance are not guaranteed during this testing phase.
You acknowledge that you are using a beta service and accept the additional risks associated with testing-phase software, including potential data loss, system outages, and feature changes without notice.
We may limit, suspend, or terminate the beta program at any time without liability.
Privacy Policy Requirements
Trading platforms collect sensitive financial information. My privacy policy needs to address this from the start.
Core Privacy Requirements for First 100 Users
- What data I collect - PII, financial information, trading activity, device data
- How I use it - Service delivery, analytics, compliance, marketing
- Who I share with - Broker APIs, analytics providers, cloud infrastructure
- How I protect it - Encryption, access controls, security measures
- User rights - Access, deletion, portability (CCPA/GDPR if applicable)
- Cookie disclosure - Analytics, tracking, third-party cookies
- Contact information - How users reach me about privacy concerns
⚠ GLBA May Apply
If I'm providing financial services, the Gramm-Leach-Bliley Act (GLBA) may require specific privacy notices and safeguards. Even with 10 users, GLBA compliance matters if I'm a "financial institution" under the law.
State Privacy Laws
| Law | Trigger | Requirements |
|---|---|---|
| CCPA/CPRA (California) | Any CA resident users | Right to know, delete, opt-out of sale |
| Virginia CDPA | VA resident users | Similar to CCPA, opt-out rights |
| Colorado CPA | CO resident users | Consent for sensitive data processing |
| GDPR (EU) | Any EU resident users | Consent, data protection officer, DPIAs |
For my first 100 users, if even one is in California, I need basic CCPA compliance in place.
Risk Disclosures
Risk disclosures aren't just nice to have—they're legally required and central to my defense if users lose money.
Where Risk Disclosures Must Appear
- Account signup - Before user creates account
- Terms of Service - Comprehensive risk section
- Before first trade - Explicit acknowledgment required
- Performance displays - Next to any backtests or historical returns
- Marketing materials - Any claims about returns or strategies
Sample: First Trade Risk Acknowledgment
Before executing your first trade, you must acknowledge:
☐ I understand that trading involves substantial risk of loss
☐ I can lose some or all of my invested capital
☐ Past performance does not guarantee future results
☐ I am solely responsible for my trading decisions
☐ The Platform does not provide investment advice
☐ I should only trade with capital I can afford to lose
By checking these boxes, I acknowledge that I have read, understood, and accept these risks.
✅ Document Everything
Log when each user received and acknowledged risk disclosures. Store this data with user records. If a user later claims they weren't warned about risks, I need proof they were.
User Onboarding Compliance
My onboarding flow isn't just about UX—it's where I collect compliance-critical information.
Onboarding Checklist
- ☐Identity verification - Name, email, date of birth
- ☐Age verification - Confirm user is 18+ (or age of majority)
- ☐Jurisdiction check - Confirm I'm authorized to serve this state/country
- ☐Accredited investor status - If required for my service level
- ☐Terms acceptance - Clickwrap with version tracking
- ☐Privacy policy acceptance - Separate consent or combined
- ☐Risk disclosure acknowledgment - Explicit checkbox
- ☐Anti-money laundering check - Basic sanctions screening
- ☐Source of funds question - If handling customer money
Know Your Customer (KYC) for Early Stage
Even with 100 users, if I'm touching funds or operating as a money transmitter, I need basic KYC:
- Collect - Full legal name, date of birth, residential address, SSN or tax ID
- Verify - Use KYC provider (Onfido, Jumio, Persona) or manual verification
- Screen - Check against OFAC sanctions lists, politically exposed persons (PEP) databases
- Document - Retain verification records for 5+ years
💡 Third-Party KYC Providers
For early-stage platforms, third-party KYC/AML providers are worth the cost. Services like Jumio, Onfido, or Persona handle identity verification, sanctions screening, and compliance documentation for $1-5 per verification—far cheaper than building in-house or facing regulatory penalties.
Beta/Testing Period Considerations
Many platforms start with a beta or testing phase. This gives me flexibility but doesn't eliminate compliance obligations.
What "Beta" Does and Doesn't Mean
✔ Beta DOES Allow:
- Limited feature set with clear disclaimers
- Higher tolerance for bugs and downtime (if disclosed)
- Ability to change or discontinue features
- Smaller user base to work out operational kinks
- More direct user feedback and iteration
✘ Beta Does NOT Exempt:
Regulatory compliance - SEC, FINRA, CFTC, state regulators don't care if I'm in "beta"
Fiduciary duties - If I owe them, beta doesn't waive them
Fraud liability - "Beta" isn't a defense to misleading users
Data protection - Privacy laws apply to test users too
Beta User Agreements
If I'm running a formal beta program, consider a separate Beta Tester Agreement that covers:
- Non-disclosure of proprietary features
- Feedback ownership (who owns suggestions/bug reports)
- No guarantee of continued access
- Right to terminate beta at any time
- Explicit acknowledgment of beta status and risks
Feedback and Testimonial Collection
Early users provide invaluable feedback. But if I want to use their testimonials or case studies, I need proper consent.
Using User Feedback in Marketing
| Use Case | Legal Requirement | Best Practice |
|---|---|---|
| Anonymous feedback | Generally OK if truly anonymized | Strip all identifying information |
| Named testimonials | Written consent required | Separate consent form with specific use cases |
| Performance claims | Must be truthful, not misleading | Include disclaimers; don't cherry-pick best results |
| Video/photo testimonials | Written release required | Model release form covering all media types |
| Case studies with returns | SEC/FINRA testimonial rules may apply | Avoid if unregistered; consult counsel if registered |
⚠ SEC Testimonial Rules
If I'm a registered investment adviser, SEC testimonial rules restrict how I can use client testimonials and endorsements. The 2020 Marketing Rule allows testimonials under certain conditions but requires specific disclosures. If I'm unregistered, using testimonials that discuss trading performance could be evidence I'm providing investment advice.
Testimonial Consent Template
Sample: Testimonial Release
I, [User Name], grant [Platform Name] permission to use my testimonial, feedback, name, likeness, and/or photograph in marketing materials, website content, and promotional communications.
I understand that:
• My testimonial may be edited for length or clarity
• I will not receive compensation for this testimonial
• [Platform Name] may use this testimonial indefinitely
• I can request removal of my testimonial at any time
I certify that this testimonial reflects my genuine experience and has not been incentivized.
Signature: _______________ Date: _______________
Scaling Considerations for Growth
As I approach and exceed 100 users, certain compliance obligations change or intensify.
Growth Milestones That Trigger New Requirements
| Milestone | Potential Triggers | Action Required |
|---|---|---|
| First paying customer | Sales tax obligations, merchant account compliance | Register for sales tax in applicable states; review payment processor terms |
| $5M+ AUM | SEC RIA registration threshold (if providing advice) | Evaluate state vs SEC registration; prepare Form ADV |
| Multi-state operations | State money transmitter licensing, state RIA registration | Conduct 50-state analysis; begin licensing process in key states |
| Institutional clients | Different regulatory treatment, accredited investor verification | Separate terms for institutions; verify accredited status |
| International users | GDPR, foreign regulatory compliance, cross-border restrictions | Geo-blocking or international compliance program |
| Handling customer funds | Money transmitter licensing, FinCEN MSB registration, custody rules | Legal counsel immediately; likely need state licenses |
💡 Plan Ahead
Some regulatory processes take months. If I'm on a path to $5M AUM and will need RIA registration, start preparing Form ADV and compliance infrastructure at $3M. Don't wait until I hit the threshold.
From 100 to 1,000 Users: What Changes
- Formalize compliance function - Designate a Chief Compliance Officer (even if part-time)
- Written policies and procedures - Compliance manual, AML program, information security policy
- Audit trails - Systematic logging of user actions, trade decisions, system changes
- Regular compliance reviews - Quarterly reviews of procedures, annual risk assessments
- Vendor due diligence - Formal vetting of third-party service providers
- Disaster recovery plan - Business continuity procedures for system failures
- Insurance - E&O insurance, cyber liability insurance, fidelity bonds
Monitoring Your First 100 Users
Early users require closer monitoring because I'm still learning normal vs suspicious behavior patterns.
Red Flags to Watch For
- Unusual trading patterns - Extremely high frequency, round-trip trades, consistent profits (potential wash trading or manipulation)
- Large sudden deposits - Especially from new users; potential money laundering
- Multiple accounts - Same person creating multiple accounts (check IP, device fingerprints)
- Inconsistent information - Address, identity details that don't match public records
- Third-party funding - Money coming from accounts not in user's name
- Rapid account changes - Frequent changes to contact info, banking details
- Foreign transactions - If my platform is US-only, foreign IPs or wire transfers are red flags
✅ Document Your Monitoring
Keep logs of suspicious activity investigations—even if I determine they're benign. If regulators ask "Did you notice X?", I want to show "Yes, we noticed, investigated, and here's why we concluded it was OK." Documentation is my defense.
My First 100 Users Compliance Checklist
Before User #1
- ☐Terms of Service finalized - Trading-specific, vetted by counsel
- ☐Privacy Policy published - GLBA, CCPA, GDPR compliant as needed
- ☐Risk disclosures drafted - Prominent, comprehensive, multi-point
- ☐Acceptance mechanism built - Clickwrap with version tracking
- ☐KYC/AML provider selected - If touching funds or required by broker
- ☐Data security measures - Encryption, access controls, secure hosting
- ☐Broker API compliance - Review broker's terms, user data handling
Users 1-25
- ☐Monitor onboarding flow - Ensure all disclosures displaying correctly
- ☐Test acceptance logging - Verify ToS version tracking works
- ☐Review user feedback - Are disclosures clear? Any confusion?
- ☐Document issues - Log any compliance questions that arise
- ☐Refine processes - Improve flows based on early learnings
Users 25-100
- ☐Formalize compliance tracking - Spreadsheet or tool for compliance tasks
- ☐Begin audit trail - Log system changes, feature rollouts
- ☐Watch for patterns - Suspicious activity, common user questions
- ☐Update ToS if needed - Version 1.1 with learnings from first users
- ☐Plan for scale - What changes at 500 users? 1,000?
- ☐Evaluate insurance - Get E&O insurance quotes
- ☐Assess registration needs - Am I approaching thresholds? Project 6-12 months out
Approaching User 100
- ☐Compliance audit - Review everything end-to-end
- ☐Documentation review - Do I have records I need?
- ☐Vendor agreements - All third parties have proper contracts?
- ☐Scale-up plan - What breaks at 500 users?
- ☐Legal counsel check-in - Review status with attorney
- ☐Registration timeline - If registration needed, when to file?
- ☐Insurance in place - E&O, cyber liability purchased
Common Mistakes with First 100 Users
- "We're too small to worry about compliance" - Size doesn't matter; activity does. One user complaint to a regulator can trigger an investigation.
- "Beta means we're exempt" - No, it doesn't. Beta is a product development phase, not a legal status.
- "We'll fix the legal stuff later" - Later is too late. Retrofitting compliance onto an existing user base is painful and expensive.
- "Friends/family don't need disclosures" - They need them most. Personal relationships complicate disputes.
- "Generic ToS is fine for now" - Trading platforms have unique risks that generic ToS don't address.
- Not tracking ToS versions - If I update terms, I need to know who agreed to what version.
- Skipping KYC for early users - If I add it later, I'll have to go back and verify everyone retroactively.
- Using testimonials without consent - Even if someone tweets something nice, I need permission to use it commercially.
- No monitoring plan - I should watch early users closely to establish baseline behavior patterns.
- Ignoring state-by-state differences - California, New York, Texas have different rules. Where are my users?
⚠ The "We'll Figure It Out" Trap
Many founders think "We're pre-revenue, we're friends and family, we're beta—compliance can wait." But regulatory violations aren't excused by startup stage. The SEC doesn't care if I only have 10 users. One user losing money and filing a complaint can end my business before it starts.
Resources & Next Steps
Related Guides
- Terms of Service for Trading Platforms - Deep dive on ToS clauses
- Privacy Requirements - GLBA, CCPA, GDPR compliance
- Broker-Dealer vs RIA - When do I need to register?
- FinCEN & AML Compliance - AML program requirements
- SEC Examination Playbook - What to expect if examined
Key Takeaways
- Compliance starts at user #1, not user #1,000
- Beta status doesn't exempt me from regulatory obligations
- Document everything: acceptances, disclosures, monitoring
- Plan ahead for growth milestones that trigger new requirements
- Invest in proper legal foundation now; it's cheaper than fixing later
✅ You're Building a Business, Not Just a Product
Getting compliance right with my first 100 users sets the foundation for scaling to 1,000, then 10,000. The habits I build now—documentation, risk disclosure, user monitoring—become the culture of my company. Start strong.