Room? Yes, there are, of course, specially if you do it better than the current ones.<p>Granted, what you need, first, Security.<p>Do it wrong, and you are screwed, even legally.<p>Second, a way to handle fiat money, Bitcoinica famously sidestepped that because they were not a true exchange, and were more of a sort of "betting" platform.<p>Some exchanges negotiate with banks, to do their thing.<p>Third, making a software that is not buggy enough to be exploited.<p>I know of a exchange where it was possible to withdraw USD twice (you deposit say, 1000 USD, then withdraw 1000 USD, and 1000 USD again).<p>Another one, calculated your fees only after you requested a withdraw (so, suppose you wanted to transfer 1000 BTC, and the fee for withdraw was 1%, it would allow you to transfer 1000 BTC, keep the BTC, and then would set your account to -10 BTC)<p>Or Bitcoinica once that had negative spreads, thus just buying and selling like crazy had outrageous profits (and outrageous losses to bitcoinica).