Crypto license
Obtaining a crypto license has become a crucial step for businesses looking to operate within the legal framework of cryptocurrency and blockchain technology. A crypto license grants companies the authority to engage in various activities involving cryptocurrencies, such as trading, custodial services, and payment processing, while ensuring compliance with regulatory standards.
At Legalaes, we specialize in guiding businesses through the complex process of obtaining a crypto license. Our team of legal experts is dedicated to helping you navigate the intricate regulatory landscape, ensuring your operations meet all necessary legal requirements. Whether you’re a startup entering the crypto space or an established company expanding your services, we provide the expertise and support needed to secure your crypto license efficiently and effectively.
Explore our comprehensive services and discover how Legalaes can assist you in achieving regulatory compliance and fostering trust in the digital economy.
Who needs a crypto license?
Whether you need a crypto license depends on the regulations and requirements of the country where your business is based or provides services. Usually, if your business deals with digital currencies, you might have to get a virtual asset service provider license, or hereafter VASP license, to work and provide services legally. Here is a list of services and business that needs a crypto license in different jurisdictions:
Crypto exchanges:
Platforms where you can buy, sell or trade cryptocurrencies for another virtual currency or fiat money.
P2P trading:
Peer to Peer trading directly with each other without a middleman.
Token legalization, ICO (Initial Coin Offerings) and Token Sales:
Companies raising funds through the sale of digital tokens may need to register their offering and obtain a crypto license, especially if the tokens are considered securities.
Custody services:
Wallet services, Companies that provide ways to keep cryptocurrencies safe. Some wallet services are custodial, meaning the company keeps the cryptocurrency for you, while others are non-custodial, giving you software to look after your own cryptocurrency.
Crypto ATM:
Businesses that run machines where you can buy or sell cryptocurrencies often need to get vasp license in a lot of places.
Cryptocurrency Mining Operations:
Some jurisdictions require mining operations to be licensed, particularly if they are of significant size, due to their high energy consumption and potential tax implications.
Crypto Payment Processors:
Services that allow merchants to accept payments in cryptocurrency must often be licensed as money transmitters.
Crypto Hedge Funds and Investment Platforms:
Funds and platforms that invest in cryptocurrencies or related products on behalf of investors might need to register as investment vehicles and obtain the appropriate licenses.
Securing your Crypto License
Securing a crypto license is essential for legally providing a range of services in the cryptocurrency space, including the trade, sale, and exchange of fiat to crypto, crypto to fiat, and crypto to another cryptocurrency. It also covers the storage of client crypto funds and the transfer of virtual currency between wallets globally.
While the European Parliament’s 2023 passage of MiCa (Markets in Crypto-Assets) regulations marked a significant step in formalizing crypto operations within Europe, it’s important to consider both global and regional regulatory frameworks. MiCa, created by the European Commission, primarily oversees markets dealing with crypto assets and related services not previously covered by European laws. Although it sets a baseline, existing national regulations within EU countries can complement or impose additional requirements on crypto service providers, such as share capital contributions, local staffing, or office presence.
Mainly all EU jurisdictions have pretty similar laws to comply with, concerning AML/CFT policies, KYC, however there are significant differences concerning requirements of the jurisdiction, such as contribution of share capital, local substance of employees or office, or its absence.
Beyond Europe, various jurisdictions around the world have their own sets of regulations tailored to the local economic and legal landscape, which might differ significantly in terms of AML/CFT policies, KYC requirements, and other operational obligations. When choosing a jurisdiction for obtaining a crypto license, it’s crucial to assess the comprehensive regulatory environment and the specific terms and benefits each offers.
Securing a VASP license or CASP license is not only a regulatory necessity but also a strategic asset that enhances your business credibility and market access worldwide. By obtaining a crypto license, your company can ensure compliance with international financial standards and attract a broader base of clients who value security and transparency.
Choice of Jurisdiction for obtaining Crypto License
Czech Republic
Poland
Slovakia
Lithuania
Spain
Estonia
Cyprus
United Kingdom
Malta
Portugal
Canada
UAE
Making the right Choice
Picking the right crypto license can be tough decision, especially in the crypto world, where each country offers different benefits like being tax-friendly, easy to get, or cheap. So, before deciding, consider these points:
Geography of your potential customers
Where your customers are from – Some places let you operate in multiple areas with one crypto license due to similar laws, while others need a local crypto license or don’t allow such activities at all.
Prestige of your crypto license
How much your crypto license’s prestige matters – Making extra efforts can be worth it if it boosts your business’s image. Companies with well-regarded licenses are often seen as more reliable and competitive by customers and investors. Getting such a VASP license can be an easy way to enter new markets and attract more clients.
Minimum requirements
What level of rules you’re okay with following – Whether you’re just starting out or looking to grow, you need to figure out how much time, money, and people you can dedicate to meet local laws.
Potential partnership with service providers
Who your service partners will be – A common oversight is not considering your future partners in software, auditing, liquidity, banking, and payment processing. These partners often have a preferred list of crypto licenses they work with. It’s best to check with them early on if your chosen VASP license fits their policies.
Timeframes
How quickly you want to start operating – Knowing when you want to begin can help decide which crypto license is best in terms of how long it takes to get it. Some crypto licenses can be gotten in just a month, while others might take a year to be approved by regulators.
Not sure about the best jurisdictions for starting crypto business? Contact specialist that can consult you or order legal opinion from qualified lawyer
Questions & answers
How to get crypto license?
Complexity of the process depends on chosen jurisdiction, which may differ from country to country, but generally speaking, first we choose suitable jurisdiction, than open a legal entity with local legal address, complete application form, gather and register additional documentation if required (share capital, local substance, due-diligence), provide AML/KYC/CFT policies and meet the regulatory standards for your project.
Can a foreigner obtain a license in Europe?
Yes, foreigners can obtain a VASP license in Europe either by registering a company in the European country where they seek the license or through a local branch of their foreign company.
Can a foreigner be a shareholder/director?
Yes, foreigners can be shareholders or directors, but they must comply with the specific country’s regulations regarding foreign ownership and management.
For example, in Poland, if there is only 1 foreigner shareholder you will must to comply with insurance tax, however if there will be 2 foreigner shareholders, there will be no extra insurance tax for the business
How long does it take to obtain crypto license?
The time varies by country but typically ranges from a few weeks to months, depending on the regulatory complexity and documentation.
As an example, the fastest solution will be in Czech Republic, where crypto license can be obtained within 1 month, and even faster if proceeding with ready-made vasp licensed company, which takes 1-2 weeks.
Is it possible to open bank account for crypto services?
Yes, it’s possible, but it depends on the bank’s policies on crypto services and the regulatory environment of the country where the account is being opened. Mainly we help our clients to open crypto-friendly corporate accounts in European EMI’s.
How much crypto license cost?
Costs vary widely depending on the jurisdiction, including government fees, legal fees, and other related expenses. It’s best to consult with a specialist for a detailed quote. Cheapest option for obtaining crypto license starts from 1000 euro.
Crypto market business models
Centralized Exchanges (CEX):
These operate similarly to traditional brokerage firms but for cryptocurrencies. Users buy and sell digital assets through the platform, which acts as a middleman. Centralized exchanges often provide additional services like storage, staking, and margin trading. They earn revenue through transaction fees, withdrawal fees, and sometimes by offering premium services.
Decentralized Exchanges (DEX):
In contrast to CEXs, DEXs allow users to perform peer-to-peer transactions directly and autonomously using smart contracts without the need for an intermediary. DEXs typically earn revenue by taking a small fee from the trades executed on their platform.
Custodial Wallets:
These services store and safeguard crypto assets on behalf of users. They control the private keys and offer ease of use, often integrating with exchanges and other crypto services. They generate revenue through fees for various services like transferring coins, converting between currencies, and other premium services.
Non-Custodial Wallets:
These provide software that allows users to store their own crypto assets without the need for a third party. They may generate revenue through offering additional services like swapping tokens directly through the wallet interface or via integration with DeFi applications.
Initial Coin Offering (ICO), Utility token issue, Initial Exchange Offering (IEO), and Security Token Offering (STO): These are fundraising mechanisms where new projects sell their underlying crypto tokens in exchange for bitcoin, ether, or other cryptocurrencies. This model helps projects raise capital to develop their platforms and services.
Crypto Lending Platforms:
These platforms provide loans in fiat or cryptocurrencies, using crypto as collateral. They generate income from interest on the loans. (additional Fintech or financial license will be required)
Yield Farming and Liquidity Mining:
Users can earn rewards by locking up cryptocurrencies in a DeFi protocol to provide liquidity. These models often involve complex strategies to maximize returns from various DeFi platforms.
Each business model in the cryptocurrency market comes with its own set of risks, regulations, and technological needs, requiring different strategies for success and compliance. As the industry evolves, these models may adapt or new models may emerge to meet the changing landscape of blockchain technology and user demand.
Ready made solutions
A ready-made crypto company is one that’s already up and running, licensed, and without any past activities, and you can take it over quickly. Buying one means you also get the crypto license it comes with.
Comparison table with VASP licensing options
| Czech Republic | Poland | Lithuania | Estonia | Canada | Cyprus | Slovakia | |
|---|---|---|---|---|---|---|---|
| Share capital Requirement | 1 CZK | 5,000 PLN (~1,100 EUR) | 125,000 EUR | 250,000 EUR | 1,000 $CAD | 25,000 EUR | 5,000 EUR |
| Corporate Tax | 21% | 19% | 5-15% | 0% | 12% | 12.5% | 21% |
| Local Staff members | No requirement Recommended to have AML Officer | No requirement Recommended to have AML Officer | Local AML Officer | Local Director Local MLRO Local Internal Auditor Local External Auditor | Local Compliance/AML officer | Local Director Local AML Officer | Local or EU Director Recommended to have AML Officer |
| Physical Office | None | None | Required | Required | Required | Required | None |
| Local Bank account | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| Project time frames | 4 weeks | 4-6 weeks | 8 weeks | 6 months | 2-3 months | 4-6 months | 6-8 weeks |
Roadmap for registration your Crypto license
Decide on Your Crypto License’s Jurisdiction
Choose suitable jurisdiction for your business model, important criteria based on compliance level, regulations, taxes, market size, geography of the clients, location of partners, timeframes and budget. There is prestigious, world recognized options as well as fast and cheap license options
Document Gathering
In this step, we build a tailored plan for your project. We check the backgrounds of shareholders and team members to make sure they’re a good fit for the license requirements. We also gather documents from you to get ready for the application, focusing on what makes your project stand out
Company Registration
The application needs to be filed by a business that’s officially registered in the country where the application is being made, or by a local branch of an overseas company, following the country’s business registration laws
VASP License applications process
Preparation of application form, business plan and financial forecast (if required by local regulator), appointing and registering local employees (if required), depositing and registering share capital (if required), due-diligence measures, verification, risk appetite, description of business and services, notification to regulator of all requirements concluded
Submission of application
When all the documents and application is submitted, we await additional questions from regulator if appears, and follow-up for successful license granted
Bank Account
Most important step for crypto business is to open crypto-friendly corporate bank account. Luckily Legalaes have multiply EMI’s partners across Europe, with direct manager communication to fasten-up the process.
Ongoing support
If required our company will help your business with connecting with local accountancy, contract preparation, VAT number obtainment etc.
Legalaes team always stays up to date with local authorities about any changes in regulatory frameworks or change of requirements. This significantly increases our professional approach and expertise, allowing to avoid any delays and manage the project few steps ahead.
Contact Us
Our expert team is prepared to address your needs and ensure your projects are handled with the utmost efficiency and care
Email: [email protected]
Phone: +372 602 8525 (request a call back or schedule a meeting)
Messengers:
Eriks Fijalovs
Head of Blockchain and Crypto
Connect with our experts
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