Cryptocurrencies are relatively new business instruments but many entrepreneurs appreciate their potential today. If you acquire a cryptocurrency license, you can legally obtain profits in the country where your company is registered. A few countries issue cryptocurrency licenses. Some others allow crypto operations without licensing them, while some countries make such operations illegal. Why should you acquire a cryptocurrency license and how can you do it?
Why acquire a cryptocurrency license?
If you engage into cryptocurrency operations in a country that requires a license while you do not have one, you may face fines and other penalties. Even if your company is registered in a country where a crypto license is unnecessary, you are going to face certain limitations too. For example, you may have difficulties exchanging crypto into fiat currencies and dealing with counterparties registered in the countries where a crypto license is required. In addition to that, an unlicensed company will find it problematic to set up an account in a foreign bank.
When applying for a cryptocurrency license, you will have to go through the typical KYC and AML procedures. Thus, holding a license will make your company more trustworthy in the eyes of your partners and financial regulators. A licensed cryptocurrency company can freely exchange crypto into fiat money and bank, exchange one cryptocurrency into another, manage its clients’ digital money, make transactions from one crypto wallet to another, accept payments in crypto for goods and services, act as an intermediary, emit its own digital currency, and so on.
When is a cryptocurrency license required?
If you plan to exchange Bitcoins or Ethers or stablecoins into dollars, euros, pounds, and so on, you should acquire a crypto license. You should also do so if you want to manage digital money that belong to third parties. Besides, if you are planning to issue your own tokens and/ or launch an ICO, you also need a license.
How can you acquire a cryptocurrency license?
The systems of crypto regulation and licensing differ from one country to another. Each country that licenses cryptocurrency operations has its own requirements. Examples include:
- The size and liquidity of the company’s capital;
- The company ownership form, its beneficial owners, its directors, and legal address;
- The type of tokens being traded.
The state duties, the application processing timeframes, and the required application document package are also different in different countries.
In general terms, the process of applying for a cryptocurrency license can be divided into the following steps:
- Choice of the jurisdiction that issues crypto licenses and registration of a cryptocurrency company there;
- Opening a business account in a reliable bank;
- Employment of the personnel;
- Acquisition of the hardware and installation of the software;
- Preparation and submission of the application document package.
The application processing timeframes vary from two to six months, depending on the country. When choosing the country where you want your cryptocurrency company to be registered, you have to study the AML-related legislation in the country with great care. The standard requirements to a cryptocurrency company include the following ones:
- The company shall keep financial records;
- The company shall implement policies that minimize the risk of money laundering;
- The company shall be cautious about questionable transactions;
- The company personnel shall undergo training on a regular basis;
- The company shall implement the due diligence procedures.
Cryptocurrency licenses are divided into classes in some countries. In Malta, for instance, crypto licenses of four classes are issued. Depending on the class of the license that you hold, you can engage into one or several of the following cryptocurrency operations: making and receiving payments in cryptocurrencies, making crypto transactions on behalf of third parties, managing crypto portfolios, keeping clients’ digital money in their accounts, working at crypto exchanges, investing cryptocurrencies, and giving investment advice. If you would like to perform all sorts of cryptocurrency operations, you will have to apply for a fourth-class license in Malta.
Countries that issue cryptocurrency licenses
| Jurisdiction | Requirements | Documents | Timeframes | Cost, EUR |
| Estonia | 1) Estonian resident among company directors; 2) Capital of at least 12,000 EUR; 3) AML officer on the staff; 4) Registered legal address in Estonia | 1) Detailed business plan; 2) Extract from the Registry and company By-laws; 3) Clean criminal record; 4) Information about the corporate bank accounts; | from 2 months | from 20,000 |
| Japan | 1) Local director; 2) Registered office; 3) Charter capital of at least 90,000 EUR; | 1) Owners and directors’ passports; 2) Business plan; 3) AML policies description; | 6 months | from 30,000 |
| Malta | 1) Charter capital of at least 750,000 EUR; 2) Submission of MFSA for approval; 3) Economic substance in Malta; | 1) Business plan 2) Company founders’ personal documents; 3) Information about the corporate bank accounts | from 3 months | from 12,000 |
| Great Britain | 1) British resident among company directors; 2) The company applying for a cryptocurrency license in the country has to comply with strict AML requirements; | 1) Electronic wallets identification numbers; 2) Business plan for several years; 3) Confirmation of legality of sources of income; | from 3 months | from 15,000 |
| Hong Kong | 1) An office in the jurisdiction; 2) Local AML officer; 3) No requirements to the charter capital; | 1) Corporate documents; 2) Business plan for several years; 3) Company owners’ personal documents; 4) Office rent agreement; | from 3 to 5 months | 15,000 — 35,000 |
| USA | 1) The company applying for a cryptocurrency license in the country has to comply with strict AML/KYC requirements; 2) Local AML officer | 1) Local company representative’s ID; 3) Corporate documents; 4) Confirmation of legality of sources of income; | 14 days | 7,000 |
| Singapore | 1) Charter capital of at least 166,000 EUR; 2) Two local directors on the staff; 3) Proof of minimum two years of directors’ experience in the business sphere; | 1) Information about the corporate bank account; 2) Corporate documents; 3) Detailed business plan; | 6 months | 30,000 |
| New Zealand | 1) Office in the country; 2) Internal rules that exclude fraud; 3) State duties for each type of crypto operations; 4) Clean criminal records for company owners and directors; | 1) Extract from the Registry; 2) Corporate documents; 3) Business plan; | 30 days | 15,000 |
| Madeira | No crypto licenses are issued in the autonomous region but acquiring an MSB status allows going into crypto business | None | 30 days | 6,000 |
| Switzerland | 1) AML/CFT reporting; 2) Security of clients’ money; 3) Charter capital of 100,000 EUR | 1) Corporate documents; 2) Confirmation of legality of sources of income; 3) Business plan for a few years; | 90 days | from 15,000 |
Some other countries are about to start issuing cryptocurrency licenses so you will have a larger choice in the near future. If you would like to engage into crypto business and you are looking for a jurisdiction to register your cryptocurrency company, we will be happy to provide assistance in the matter to you. Please contact us by email, our online chat, or a messenger without any hesitation.
Why do I have to obtain a crypto license while it is not required in many countries?
Having a cryptocurrency license will take your business to a higher level and open a wide range of opportunities to you. You are not going to have any problems opening bank accounts, your partners will trust you, you will be able to issue cryptocurrencies, launch an ICO, act as an intermediary, and so on.
How hard is it to obtain a crypto license?
Obtaining a cryptocurrency license is not easy. Countries that issue crypto licenses put forward tough requirements to the applicants. Your crypto company shall have substantial registered capital, experienced personnel, a legal address, and all facilities that are necessary to carry out business operations. The company registration officers will often want to have a personal interview with the company founder(s) and ascertain that the company clients’ money will be perfectly secure. It is rather difficult to acquire a cryptocurrency license but it is worth it.
How much time does it take to obtain a crypto license?
The cryptocurrency acquisition time frames vary between 14 days and 6 months, depending on the jurisdiction.
