Cryptocurrencies open enormous opportunities for raising funds. While cryptocurrencies continue to gain traction with investors around the world, the need to govern them has been prioritized in many countries as well.
However, compared with the early age of the industry, most countries have adapted their legislation to address the major threats that are commonly associated with cryptocurrencies.Â
In order to carry out commercial transactions with crypto assets, it’s important to comply with the applicable law. In most jurisdictions, a separate license to provide cryptocurrency services such as a crypto exchange and custodial wallets is required. That is a rather complicated process with plenty of nuances, but crypto licensing is important for firms to establish themselves.
Still, Prifinance Company helps to obtain licenses for cryptocurrency exchange comparatively easily based on the individual action plan. Of course, developing a successful application plan is possible based on the particulars of a business case only. But, some background legislative aspects always remain the same. Most jurisdictions made their legislative acts more or less coherent to cover the next points.
Starting Points
Regardless of the underlying technology, governments have been vocal about the usage of this emerging asset class. Thus, the crypto regulatory framework differs in every nation. From country to country, cryptocurrency laws cover such aspects as:
- Nature of crypto assets and their categories (the essence of the assets, basic rights, and obligations provided along with them are assessed by the regulators);
- Sales requirements (specific conditions that have to be met to make crypto deals effective);
- Securities (some crypto assets may fall under specific security regulations when they have certain characteristics);
- Money transmission (purchasing cryptocurrencies for fiat money and vice versa requires compliance with effective banking and payment regulations);
- AML (confirming that the funds used to sell/purchase crypto assets don’t originate from illegal sources – a must-have element while dealing with cryptos in any country);
- Personal data protection (crypto projects always deal with the personal data of users and have to comply with data protection laws, especially the GDPR);
- Customer rights protection (clients of crypto services have to obtain sufficient and clear information about the nature of assets and deals carried out with them).
Countries have been working on several aspects of regulation, including taxation, but this somehow becomes concerning for crypto ventures. Crypto exchanges only operate in countries that take a progressive approach to crypto regulation.
Thus, crypto trading platforms take root where there is little nuance in crypto licensing. A live example of such a scenario is when Indian crypto exchange Zebpay paved its way to obtain a Singapore and UAE license, prompted by the 1% transaction tax the nation imposed recently.
Licensing Nuances
If you intend to deal with cryptocurrencies on a commercial basis, getting a license is required for this purpose. Note that cryptocurrency is subject to different classifications and tax regimes. Each state has its specific qualification requirements to get a crypto license, in particular:
- Company type (a future licensee should be registered in a specific legal form, most often that is a joint-stock company);
- Share capital amount (some part of this capital may be also required to be paid before the moment of company registration, but more is better in this case);
- Specific IT resources should be in place to ensure the proper operation of a licensee, including tracking of its deals with customers;
- Specific requirements for the expertise and qualifications of management have to be observed, including with regard to a good reputation for each manager;
- Having a separate AML officer is a must-have condition to get and keep a crypto license active;
- Arranging effective training for staff is required periodically.Â
Next Well-rounded Compliance
A company that provides cryptocurrency services has to ensure ongoing monitoring of transactions carried out on the exchange. Knowing your clients through KYC procedures is required for every cryptocurrency exchange. AML compliance is a must-have condition of operation for any crypto project.Â
Carrying out detailed and enhanced verifications is needed when there are cases of suspicious transactions, for instance, those that may be potentially related to illegal funds or money laundering. Timely notifications to regulatory bodies are also necessary in certain cases.
How Prifinance Specialists May Help YouÂ
Prifinance lawyers are ready to assess your case and pick the most suitable options for your business, including crypto licensing and ensuring overall compliance with the applicable laws. Provide the details of your business case and commercial objectives to select the most suitable jurisdiction for you.Â
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