What type of activity is subject to crypto licensing?
Today there are many crypto enthusiasts who wonder if they need to go through licensing to work legally. The fact is that most countries have already created a legal framework for regulating the crypto industry and mercilessly punishing all attackers. Today we will tell you who is required to get a crypto license and how this can be done.
Why is permitting necessary?
To carry out activities related to crypto assets transactions, you need a permit, and in the absence of it, in almost all areas, the action will be considered illegal, and this leads to various fines and the closure of the company either for a certain period or permanently without the possibility of restoring activities. Of course, there are countries where a permit is optional, but not only are there significant risks associated with the exchange, but it will not be possible to cooperate with licensed organizations that prefer reliable partners operating within the framework of the law.
A permit guarantees reliability and security based on implementing the AML and KYC program in the company and attracting other licensed organizations to your business. In addition, almost all licensed companies undergo an initial check and then systematic reviews aimed at the compliance of their activities with the requirements in this jurisdiction – reporting, checking accounting, monitoring the company’s financial balance, and much more.
Who needs to get it?
There are several types of financial activities with virtual currency that require a crypto permit:
- Currency exchange services: one type of asset is exchanged for another, or a cryptocurrency is traded for fiat funds (and vice versa).
- Forex: purchase/sale of virtual coins in the financial market for companies and individuals.
- Broker’s services – intermediary activities of the organization in cryptocurrency transactions.
- Management activities include such services: a contract based on which one firm is responsible for the safety of the virtual currency of another organization (providing e-wallets and vaults); management (investments, transactions) of crypto-currency funds of another firm.
- In the case when staff salaries are paid in virtual currency.
- When a company has created and put on the market its e-coin, which has a specific financial value.
Therefore, before opening a business, you need to decide on the type of financial activity, hence the kind of crypto license. In many countries, crypto activities are loyal: Singapore, Japan, Poland, Czech Republic, Latvia, Lithuania, South Korea, and many other jurisdictions.
Please note that there are countries in which one type of license is issued (or for only one kind of activity). There are countries where you can get more than one permit (for example, in the Czech Republic, there are 3 types) or one license, but giving the right to carry out various kinds of financial activities with virtual funds.
Is it difficult to get it?
The system for obtaining a permit in each country is different, but the following general requirements exist.
Choose a country, register a firm, and then open a bank account and deposit minimum start-up capital. Sometimes, this amount must be stipulated, but it should be enough to run the business for several months.
To manage the business, you must hire experienced professionals with a clean reputation and appoint an employee in charge of the AML policy. In addition, KYC (personal identification) requirements must be met. Also, in each country, there are requirements for the company’s management – the number of employees in the state and their qualifications. But there may also be such a condition that at least one of the executives must have citizenship in a given country.
Many countries have a condition that there is a real office on their territory, which can be checked for its presence and technical equipment with software.
By the way, a business plan must be developed several years ahead, indicating specific figures. The terms for obtaining a permit can be from several weeks to six months or more, and in some countries, the time depends on the type of registration: personal presence or online registration.
Thus, a permit is highly recommended to start finance activities related to virtual currency. Then your business will be reliably protected from fraudulent activities. If your organization has problems obtaining a crypto permit or has questions, Gofaizen&Sherle, which employs experienced specialists in this field, can help you.