What license is needed to open a crypto exchange?

mining cryptocurrency

Interest in cryptocurrencies continues to grow, and many are starting their own business today. If you decide to open a crypto exchange, you must learn in advance about the legal aspects of such activities and the benefits of obtaining a broker license crypto. Today we want to talk about why and who you need a license for and the benefits of getting a work permit in different countries.

Why is such a license required?

A firm that has decided to engage in the crypto business needs to obtain a special permit for this – a cryptocurrency license; otherwise, its activity will be considered illegal, and this threat with fines and sanctions.

Suppose a company conducts its crypto activities in a country without such permission. In that case, this carries excellent risks associated with the exchange of virtual currency for fiat funds, as well as the inability to conduct transactions with firms registered in countries where this business is licensed and operates within the framework of the legislation.

The fact of licensing guarantees protection from the activities of fraudsters who conduct transactions illegally. Because the licensed company is subject to the rules of AML (anti-illegal financial transactions) and KYC – “you need to know the client by sight.” Licensed firms are more reliable and transparent. So it is more profitable to cooperate with such a company.

What business needs a cryptocurrency license?

Several categories of organizations are required to obtain a work permit:

  1. For a company offering interchange: (cryptocurrency – cryptocurrency; cryptocurrency – fiat);
  2. If a company is engaged in the management of the crypto activities of another company, it concludes transactions and is responsible for storing capital (wallets, vaults).
  3. If employees are paid in virtual currency.
  4. If the firm issues its token that has a specific value.

Therefore, before starting your business in this area, you must decide in advance on the type of activity – hence the license you need to obtain.

Today, a considerable number of countries have learned to regulate the crypto industry; the most popular legally are Lithuania, Estonia, Great Britain, Poland, the United Arab Emirates, Malta, Switzerland, the USA, and some others. The licensing algorithm in each country is different, but there are general requirements.

Stages of company licensing

A number of the following conditions must be met to obtain a crypto license:

  1. Register a company in the country of your choice.
  2. Open a bank account and deposit the authorized capital. Financial resources should be enough to start a business and for its activities for at least a few months.
  3. Hire qualified specialists (with a clean reputation) who have experience in this area and have been identified.
  4. The requirements for the organization’s beneficiaries, managers, and founders must be met.
  5. Appoint a person responsible for compliance with AML rules – controlling crypto transactions and tracking attempts at illegal operations.
  6. Provide a developed business project for several years ahead.
  7. Ensure the company’s technical equipment is at a high level: software for transactions, bookkeeping with the compilation and storage of a register of all trades, and a system for tracking illegal transactions related to money laundering.
  8. Decide on the company’s legal address (preferably with a real office – in many countries, a virtual office will not work).
  9. Prepare all necessary documents for doing business.
  10. Send the required documents for license registration.

Registration of a crypto license can take one month to six months, depending on the jurisdiction and on which registration method you have chosen: personal presence or online.

AML system requirements

Now let’s take a closer look at the AML requirements for organizations since this is one of the most critical components of providing a crypto license.

First, an approach is needed to predict the risks associated with illegal activities. All employees must systematically take various courses, training, consultations, and advanced training. Companies should develop acts and regulations to reduce the risks of laundering financial assets. Maintain regular reports and submit them to the relevant regulatory authorities in the country. Collect data on suspicious crypto transactions and report them to the competent state authorities on time.

Types of cryptocurrency licenses

Depending on the company’s chosen crypto activity, there are several types of crypto licenses:

  1. Cryptocurrency exchange among themselves.
  2. Exchange of cryptocurrency for fiat money and vice versa.
  3. Cryptocurrency management of another company – storage and management of virtual funds (wallets, vaults).
  4. Intermediary activity (company – broker).

Different countries have their types of licenses, and only some countries may have the full range of cryptocurrency activities for registration.

Countries that provide registration for activities with cryptocurrency may impose different requirements on the company – this is the amount of authorized capital, the qualifications of employees, AML control, the presence of a physical office within the country’s jurisdiction, and much more.

According to the table below, you can make a comparative analysis for some countries to obtain a crypto license.

Country Requirements List of documents Registration term
Estonia The head is a resident, the authorized capital is more than 12,000 Euros, AML officer, Estonian office registration. The business project, articles of association, documents on the absence of a criminal record, and data on the company’s accounts. 3 months
Malta Registered capital of more than 750,000 euros, MFSA approval, physically present. Business projects, constituent documents, and data on company accounts. 3 – 4 months
Switzerland AML and CFT report client capital protection, EUR 100,000 share capital. Constituent documents, documentary confirmation of the source of capital, and business projects. 3 months
USA The most important thing is to fulfill the AML/KYC2 requirements and have an AML resident employee on staff. Constituent documents, documentary confirmation of the source of capital, and information of the local representative. 2 weeks – 1 month
United Kingdom The staff has a resident manager in full compliance with AML requirements. Vault (wallet) addresses, business projects, and documentary evidence of the source of capital. 3 – 6 months

Suppose you need help understanding the terms of crypto regulation in different countries and what kind of license you need to obtain. In that case, you can contact our experts, who will analyze your company’s activities and tell you which jurisdiction suits you best.

How does our company help in obtaining a crypto license?

Getting a work permit on your own will be extremely difficult if you do not have a law degree. Our specialists strive to help various crypto organizations operate entirely legally. They will answer any questions and give you a full consultation. The list of our services includes:

  • assistance with paperwork;
  • checking how your organization complies with the requirements of government regulators;
  • help in opening a bank account;
  • assistance in selecting competent local workers and finding a suitable office.

Our specialists have the necessary experience and knowledge to help you obtain a permit in the shortest possible time and with minimal financial investment.

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Hi, I'm Raj Hirvate and I am a Tech Blogger from India. I like to post about technology and product reviews to the readers of my blog. Apart from blogging i'm a big Anime fan I Love Watching Naruto, One piece and Death Note.

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