From the moment they appeared, cryptocurrencies began to be perceived by users as a step into the future. While most states are afraid of uncontrolled payment systems and prefer the policies of prohibition in connection with this incomprehensible innovation, some jurisdictions have taken a progressive outlook and started regulating the use of cryptocurrencies. In those countries, where cryptocurrencies are legal, working with them turns out to be an additional opportunity for businesses that want to earn money. However, legal earnings require a license – working “in the shade” without proper documents will eventually just raise questions from the local tax authorities.
Why Do I Need a License to Work with Cryptocurrencies?
Businesses should not make profit against the will of the state – on the contrary, it should be happening with its active assistance. A company that makes earnings “under the rug” is always at risk: the income that is not regulated by local laws can easily be announced illegal. If you are planning to build a long-term and profitable business in the sector of crypto finances, it is important to choose a jurisdiction that recognizes the existence and circulation of cryptocurrencies. This approach allows you to regard the state not as a potential enemy, but as an ally ready to stand up for your rights.
The same is true about finding partners. Profit from operations with cryptocurrencies is possible only with the maximum involvement of the society – if the company fails to organize large-scale trade, that will make its prospects very questionable. However, clients want to entrust their funds to a trusted counterparty who can be relied upon – this is especially true in the case of cryptocurrencies, transactions in which are almost impossible to track. The license issued by the state that includes circulation of cryptocurrency in its legislation is a direct guarantee of the company’s reliability for potential partners.
InternationalWealth is ready to provide expert assistance to all entrepreneurs who wish to obtain a foreign license in order to participate in the legal circulation of cryptocurrencies in accordance with the requirements of the business sector they choose. We help make opening a correspondent account or creating an individual cryptocurrency wallet extremely simple. The initial consultation on selecting the jurisdiction and the type of license is completely free of charge. In this article we are going to make a brief overview of the list of jurisdictions most often considered by potential owners of crypto business in order to make things simpler and quicker.
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At the moment, there are three categories of countries: those that have adopted regulations on the circulation of cryptocurrency and developed the principles of doing this business; those that have not yet declared any control of the industry; and those who have stood in opposition to any deals with cryptocurrencies. In order to obtain a license and start a business, you need to choose among the jurisdictions in the first group – the rules there are already clear and precise, which allows you to build long-term strategies.
Consider the states that are promising for conducting a cryptocurrency business and would allow you to obtain a license without overcoming any special hurdles.
Country number one on this list is obvious – cryptocurrencies would not exist in their modern form if it were not for the United States, where they were first used pay for “real” goods. Separate vendors started accepting virtual currencies a good decade ago. So, it is not surprising that now, in the 2020s there is a fairly developed legislative framework and clear procedures for obtaining a license for a cryptocurrency business.
On the federal level, regulation of the circulation of cryptocurrencies is carried out by the the Securities and Exchange Commission (SEC). From the point of view of the US Internal Revenue Service, cryptocurrencies cannot be considered money – they constitute legitimate property subject to taxation.
However, it is pointless to look for uniform rules for obtaining an American license for operations with cryptocurrencies – the regulation policies vary greatly from state to state. Local legislation in the matter of licensing is considered dominant, and each state is an independent jurisdiction. New York, considered the center of all types of business, insists on obtaining a BitLicense. Exchanging cryptocurrencies into fiat money and into other digital currencies are considered to be different operations that require different licenses.
The conclusion is obvious: a business owner’s judgement should not be clouded by the promising prospects of the market; they should enter the sector in a particular state only if they fully understand the legislation of that very state.
The probable birthplace of bitcoin could not fail to participate in the rapid growth in the popularity of digital currencies. The Japanese non-state commission on digital currencies was created back in 2014. Its existence marked the beginning of a new era. Today, the jurisdiction recognizes cryptocurrencies as legal-tender money. Despite being called “non-state”, the commission is the very organization that deals with regulating business activities related to operations with cryptocurrency.
This world-class financial center showed foresight some time ago by introducing rules for regulating the cryptocurrency market. The Securities and Futures Commission is the regulatory body responsible for the control and issuance of licenses. The state regards cryptocurrencies as a virtual commodity comparable to securities, therefore the exchange of one crypto coin for another is free and does not require a license.
The situation is different with the exchange for fiat money. If your business is going to deal with cashing out or withdrawing funds from cryptocurrency wallets to bank cards, make sure you obtain a Money Service Operator license.
Another center of global business has quite a favourable attitude to operations with cryptocurrencies. At the same time, the UK is not one jurisdiction, but several; in this connection, the Isle of Man is the greatest attraction for the cryptocurrency business. Its popularity is connected with the lower tax rates for individuals, tax benefits and tax breaks for legal entities, and the absence of taxes for foreign companies. On the Isle of Man, even online casinos can operate with cryptocurrencies – there is no need for any special crypto-currency license.
If you are interested in registering a company in the Isle of Man, our experts will be happy to help. Feel free to e-mail us at email@example.com to request an individual consultation.
The absence of separate business licensing is a nice bonus, but the government has tried to give cryptocurrency operations the most “traditional” feel. You will have to forget about secrecy – a company working with the blockchain undertakes to identify each client and store information about all the performed transactions. Strict obligations are imposed on the cryptocurrency business by the FSC (Financial Supervision Commission): the business is required to report to the state all the suspicious transactions that may have signs of possible money laundering.
This small Baltic country has achieved notable economic success thanks to its positive approach to innovation, which includes favourable policies for cryptocurrencies. In recent years, Estonian licenses have been in great demand, allowing legal business activities not only within that jurisdiction, but also throughout the European Union. The role of the regulatory authority is performed by the Estonian Financial Inspectorate. The Estonian license is issued relatively quickly – you can count on a positive result within six months.
Find out more about getting a business license in Estonia from our experts. Please contact us to request an individual consultation.
Swiss jurisdiction recognizes cryptocurrencies as money – one of the local banks has even issued its own coin. In this connection, a separate cryptocurrency license is not required, but the business must be licensed to conduct financial transactions in general. The licenses are issued by the Financial Market Supervision Service. Any business that simply accepts payment for services and goods or pays for them can do without licensing. Permission is required only for commercial activities in buying and selling coins. The canton of Zug is considered especially attractive for cryptocurrency businesses.
Russia’s closest western neighbor and ally has demonstrated willingness to be modern – in this country, cryptocurrencies and business associated with them are absolutely legal. Electronic coins are regarded as money, therefore everyone who wants to operate with them receives a license from the Belarusian National Bank. The state has a special center for transactions in virtual currencies. There is even a state cryptocurrency called thaler.
This country offers a good option for those who want to run a cryptocurrency business: to get the registration in a quiet remote offshore harbor. Registration of a company in Belize takes no more than 24 hours; this rule also applies to licenses for cryptocurrency exchange activities. IFSC acts as the registrar.
On a global scale, cryptocurrencies can no longer be considered a newfangled curiosity that is not recognized by the civilized world – on the contrary, many jurisdictions have gone towards a new reality, trying to control and regulate it. For business, this is not a problem, but a benefit – it becomes possible to conduct business, being confident in the future. Timely obtaining a license in the right jurisdiction allows you to safely use new technologies for profit.
The benefits of the license for cryptocurrency operators
Obtaining a license allows the business owner to legitimize the company’s actions within certain limits. Knowing that your business activities are allowed by the law of the state and do not violate any regulations, being sure that you are paying taxes on time creates positive expectations of a bright future for your company.
The benefits of the license from the clients’ point of view
Cryptocurrencies are popular among connoisseurs as a way to pay without revealing their identity. However, the lack of control gives fraudsters a lot of room for maneuver. The fact that a business has a license to operate in this business sector shows that the company is trying to look decent and will not risk its reputation for dubious benefits.
Countries where you do not need a license to do business with cryptocurrency
There are some countries where this kind of license is not required. A separate license is usually needed when the jurisdiction recognizes cryptocurrencies as some kind of value that is not equivalent to classic fiat money. If the law instructs to consider cryptocurrencies as “ordinary” money, then a license is needed. In that case, the license is similar to the one received by companies working with traditional currencies.