To develop a legal crypto business, you need a crypto license. Many countries offer loyal conditions for business in this sphere. If you have not yet decided in which jurisdiction to open a license, study the rules by country. The European crypto license allows you to operate legally in the EU, makes business transparent and increases the trust of customers, partners and government regulators.

The European Parliament approved MiCA on April 20, 2023 and set a precedent for other jurisdictions.

MiCA is a regulatory framework from the European Commission. It is designed to regulate cryptoasset markets and related services that are not currently subject to EU rules. The law has been in development since 2018. It aims to provide a single licensing regime for all EU member states. MiCA is expected to come into force from mid-2024 and early 2025.
Thus, the choice of jurisdiction should involve consideration of the specifics of regulation, conditions and benefits of the cryptocurrency licensing sphere in the EU countries.

Lithuania

Lithuania stands out as the leading European jurisdiction for setting up cryptocurrency-related businesses. Getting a license in Lithuania is quite easy and fast. The current Lithuanian legislation allows to register a cryptocurrency company and pay the required amount of authorized capital (125 000 €) in installments.

Estonia

Cryptolicense here has a number of advantages, including the ability to operate in all EU countries and low taxes. Thanks to modern digital infrastructure, the use of electronic signatures and ID cards, obtaining a license for cryptocurrency exchange is fast. Today, virtual currencies are controlled in the same way as paper money. They are legalized and put on a par with alternative means of payment.

Poland

In November 2021, Poland introduced regulation of virtual assets. Companies operating in this field must register in a separate state register of cryptocurrency companies (the so-called Polish cryptolicense). In addition, they must meet relatively simple procedural requirements and the registration period is relatively short.

Czech Republic

Currently, there is no specific cryptocurrency license in the Czech Republic.
However, in order to legally operate in this area, it is mandatory to register in the Registry of Trade Licenses overseen by the country's Ministry of Industry and Trade. Thanks to this license, companies are allowed to operate in any EU country. To register a company (in the form of an LLC) is not required to open a corporate account, and the minimum amount of share capital is 1 kroner per shareholder.

Spain

Cryptocurrency regulation in Spain is still under development, but on February 17, 2022, a Circular was sent from the government of the country, which defines the status of cryptoassets and regulates their advertising. These currencies are not banned in Spain, but are not recognized as legal tender.
Legal activity in crypto-business requires registration as a VASP and obtaining a license in Spain.

Switzerland

In Switzerland, the financial supervisory authority FINMA is responsible for regulating cryptocurrencies and licensing blockchain projects. According to the federal tax authorities, cryptocurrencies are recognized as legal assets here. To operate legally, you need to obtain a crypto license in Switzerland.

Slovakia

There are 2 types of crypto licenses for companies to operate legally: for cryptocurrency exchange and for cryptocurrency wallet maintenance and storage. The Slovak government has strict requirements for the regulation of cryptocurrency and the license for this activity.

Anti-money laundering (AML) legislation and KYC regulations apply to regulation and licensing. In March 2018, Slovakia passed cryptocurrency laws where all profits from transactions are subject to taxation.

Despite a few strict rules, Slovakia's cryptolicense remains attractive to investors: there are no citizenship requirements, no capital controls and no exchange controls.
The tax is 22%, but with an agency scheme and proper accounting it can be reduced to 0.5%.

Portugal

Companies here are classified as VASPs (virtual asset service providers). They must have a license from Banco de Portugal before starting operations. There is no minimum share capital required here, no or requirements for declaration of crypto-assets and taxation of cryptocurrency income for individuals.

Bulgaria

There is no need to obtain a special crypto license, as cryptocurrency is not considered a financial instrument and is not regulated by the financial regulator. However, companies must comply with certain rules - anti-money laundering and financing of terrorist activities, regulate transactions over 15000 euros. To get started, you need to register a company or obtain a financial license from the FSC.

Great Britain

The country stands out as an attractive destination for cryptocurrency companies due to low taxes, simplified registration, EU access and government support for the business ecosystem. The Financial Conduct Authority (FCA) regulates the cryptocurrency market. While there is no mandatory requirement to obtain a license, getting permission to operate involves registering with the FCA. This process involves submitting the necessary paperwork. It also requires the company to be registered in the UK, have an office and comply with AML/CFT policies.

Cyprus

Doing business in Cyprus requires a Cyprus cryptocurrency license. This can be a complicated process. However, licensing offers several advantages: clear regulation, an attractive tax system, a variety of licenses, recognition of a wide range of financial instruments, an active crypto ecosystem and access to banking services. To obtain a license, companies must be registered in Cyprus, have a physical office, a local bank account, a qualified team, comply with EU directives, and have adequate customer records and data security systems in place. CySEC expects companies to develop an anti-money laundering policy and establish effective procedures for the management and operation of the company.

Cryptocurrency exchange license in other jurisdictions

In addition to European crypto licenses, you may want to consider registering in other jurisdictions where registration may differ depending on the regulation of the cryptocurrency market.

In Europe, cryptocurrencies and crypto exchanges are strictly regulated by government agencies and regulators, while in other countries the sector may be more free. In addition, obtaining an exchange license in other jurisdictions may offer advantages such as more flexible capital and resource requirements to obtain a license or lower taxes. However, each jurisdiction has its own cryptocurrency license.

MSB Canada

FMSBs and MSBs are two types of financial institutions in Canada. They also allow professional activities.

An FMSB is a non-banking institution that provides financial services outside of Canada, while an MSB provides them domestically. MSB license holders in Canada have advantages such as no minimum share capital, a high level of economic freedom, a sound banking system and access to a large domestic market with minimal regulatory costs.

UAE

Cryptocurrency exchange registration in the UAE is becoming a popular option due to the availability of free zones where businesses can trade and store cryptocurrency: DMCC, DAFZA, ADGM and IFZA. The requirements, conditions and features of a license in Dubai depend on the chosen zone.

The UAE government recognizes the possible risks associated with crypto-assets, but the country is attractive for business due to loyal taxation (corporate tax, dividends and personal income tax - 0%), full legalization of cryptocurrency and absence of import and export tax.

Kazakhstan

On April 1, 2023, the Law on Digital Assets came into force, which created a legal framework for their control over issuance and circulation in the country.
The law permits the issuance and circulation of unsecured digital assets through the Astana International Financial Center (AIFC). Crypto-license holders in Kazakhstan who provide financial services through MFCA are exempt from tax payments until January 1, 2066.

Georgia

To get a license in Georgia, you first need to register a company. It is recommended to do it in the Free Industrial Zone (FIZ) due to favorable taxation and other favorable conditions. At the moment, the local cryptocurrency sector is monitored but not regulated. Individuals do not need a special permit to work with virtual currency; commercial companies must obtain a crypto license. The process of registering a company and obtaining a license takes only 2-3 weeks.

Hong Kong

Hong Kong topped the global "crypto-readiness" rankings in 2022, surpassing the US and Switzerland, due to the large number of blockchain startups and cryptocurrencies per capita.

The introduction of new regulations in April 2023 requires all virtual asset service providers to obtain a crypto license in Hong Kong.

Singapore

The Payment Services Act 2019 requires exchanges to obtain a crypto license in Singapore to exchange cryptocurrency and paper currencies. Companies must meet the regulator's requirements, be registered in Singapore, have an office and resident director, and comply with risk management and anti-money laundering policies.

Gibraltar

The recognition of cryptocurrency as a means of payment, low tax burden and strict anti-money laundering measures make Gibraltar ideal for crypto businesses. Obtaining a license here promises access to global markets and support for an innovative ecosystem.

El Salvador

El Salvador is attracting attention as the first country to officially recognize Bitcoin, offering tax incentives for companies with licenses.

Here, to get a license, you need to register a company, have a developed business plan and an AML/KYC policy.

Labuan

Labuan, a federal territory of Malaysia, stands out as a favorable jurisdiction for due to its low taxation and favorable regulatory environment. In 2018, the country's Financial Services Authority began issuing licenses to cryptocurrency exchanges with a corporate tax rate of just 3%. Labuan offers access to global markets without the need for a local partner and the ability to utilize Malaysia's 70+ tax treaties.

Types of cryptocurrencies

There are two types of cryptolicenses - specialized, which allow the exchange of cryptocurrencies for fiat money; and traditional.

There are many cryptocurrency licenses available in different countries for different types of services.

Here are some examples:

● Cryptocurrency exchange license: allows companies to exchange cryptocurrency for fiat money and vice versa.
● Cryptocurrency storage license: allows companies to store cryptocurrency on behalf of clients.
● ICO/STO license: allows companies to conduct initial coin or token offerings.
● Cryptocurrency bank license: allows companies to provide banking services for cryptocurrency such as lending, deposits, etc.
● Cryptocurrency mining license.

In addition, different countries may have different rules and regulations that may affect the cryptocurrency licensing process.

Standard process for obtaining a cryptocurrency license for a cryptocurrency exchange

The process of obtaining a cryptocurrency license can vary from jurisdiction to jurisdiction. It may involve certain steps for different countries. First you need to decide on the jurisdiction. Then register the company. Collect and prepare the necessary documents and information to submit to the regulator. Then you need to open a corporate account (in most cases with a bank in the chosen jurisdiction). Hire specialized staff, including certified employees. Develop and implement security policies and protect user data. It is also required to prepare the necessary hardware and software for the exchange. Next, an application should be submitted to an authorized body for review. After verification, a cryptolicense is issued.

Standard AML requirements

AML (Anti-Money Laundering) - a set of measures and procedures aimed at combating money laundering and terrorist financing.

When conducting cryptocurrency activities, it is necessary to comply with several standard AML requirements:

● Customer identification (KYC).
● Monitoring of transactions. They must be monitored and limits on the amounts transferred must be set.
● Companies must assess and mitigate risks relating to money laundering and terrorist financing.
● A set of rules should be developed to regulate compliance with the law and also minimize the risks of money laundering.
● Companies should train their employees on legal basics, etc.
● Records of their customers and their financial transactions should be kept for a certain period to ensure that they are available for inspection.
● Reporting on their anti-money laundering and counter-terrorist financing activities is a regulatory requirement.

DAO LeviPartners News © 17.07.2024