The process of obtaining a cryptocurrency license is an essential and multifaceted step for companies planning to operate with digital assets. Acquiring a license opens up opportunities for legally conducting activities in the field of cryptocurrencies, building trust with clients, investors, and partners, and working within a legal framework. In this article, we’ll examine the main stages of obtaining a cryptocurrency license, the popular jurisdictions where it can be issued, and the key opportunities that licensed companies can pursue. More details can be found at https://coredo.eu/.

What is a Cryptocurrency License, and Why is it Important?

A cryptocurrency license is a permit issued by regulatory authorities in a specific jurisdiction, allowing a company to legally engage in cryptocurrency-related activities. It confirms that the company complies with all requirements related to customer data protection, transaction security, and anti-money laundering. Holding a license significantly increases trust in the company, improves its reputation, and provides access to major banking and payment partners.

Types of Activities Allowed with a Cryptocurrency License

With a cryptocurrency license, companies can engage in the following types of activities:

  • Cryptocurrency exchanges: buying and selling cryptocurrencies for fiat currency and exchanging cryptocurrencies with each other.
  • Cryptocurrency wallets: providing services for cryptocurrency storage and asset management for clients.
  • Crypto-trading: enabling cryptocurrency asset trading on behalf of clients or on the company’s platform.
  • Tokenization platforms: issuing and offering tokens for various projects, including ICOs and IEOs.
  • Asset management: offering investment services in cryptocurrency assets on behalf of clients.
  • Blockchain-based solution development: companies can be licensed to provide services related to blockchain technology, including the creation of smart contracts and crypto platforms.

Jurisdictions for Obtaining a Cryptocurrency License

Several popular jurisdictions offer opportunities for obtaining a cryptocurrency license, each with its own conditions and requirements. The most popular jurisdictions include:

  1. Estonia
    • Estonia is one of the most popular countries for obtaining a cryptocurrency license in Europe due to its transparent and straightforward requirements.
    • A local representative and a resident director are required.
    • The license allows engagement in crypto exchange and cryptocurrency storage services.
    • It’s important to note that Estonian regulations have tightened since 2020, with strict AML and KYC requirements now in place.
  2. Malta
    • Malta is an attractive jurisdiction for crypto businesses due to its favorable legal system and clear regulations.
    • The legislation categorizes cryptocurrency companies based on their activity: from simple exchanges to token issuance.
    • Substantial financial input and proof of the company’s financial stability are required.
  3. Gibraltar
    • Gibraltar offers appealing conditions for companies involved in cryptocurrencies and blockchain technologies.
    • The regulator requires a complete list of controlling persons and adherence to international AML/KYC standards.
    • This jurisdiction is popular among large crypto exchanges and financial companies.
  4. Switzerland
    • Switzerland offers a solid legal foundation for cryptocurrency and blockchain companies.
    • A FINMA license allows businesses to work in various areas, including trading, storage, and digital asset management.
    • The jurisdiction has strict KYC and AML processes and a high level of tax regulation.
  5. Lithuania
    • Lithuania also offers the possibility to obtain a cryptocurrency license at relatively low costs.
    • A registered presence is required, and all AML/KYC requirements must be followed.
    • This jurisdiction is attractive for small companies working with cryptocurrencies that are not yet aiming for large markets.

Stages of Obtaining a Cryptocurrency License

The process of obtaining a cryptocurrency license may vary depending on the jurisdiction but generally includes the following main stages:

1. Choosing a Jurisdiction and Company Structure

The first step is to select a suitable jurisdiction and register the company. It is important to consider the jurisdiction’s requirements for registration capital, local directors, reporting standards, and other aspects.

2. Document Collection and Submission

All required documents need to be prepared and submitted, including:

  • Company incorporation documents.
  • Proof of address and identification of all key persons.
  • A business plan and a description of planned activities.
  • The KYC and AML policies that the company will implement.
  • Financial statements and plans to demonstrate the company’s financial stability.

3. Review and Approval

The regulator reviews all documents, evaluates the business plan, and assesses compliance with legal requirements. Additional experts and auditors may be involved at this stage to assess the company and its potential activities.

4. Payments and Licensing

After a successful review, the company pays the licensing fee and receives the license. Some jurisdictions may require annual payments to renew the license and ensure compliance with all requirements.

Benefits of Obtaining a Cryptocurrency License

Obtaining a cryptocurrency license provides a company with several important benefits:

  • Access to banking and financial services: holding a license simplifies interactions with banks and financial organizations.
  • Increased client trust: legal status helps attract more clients and investors.
  • Expansion of business opportunities: licensed companies can enter new markets, engage in strategic partnerships, and open offices in various countries.
  • Risk mitigation: the license helps reduce the risks of fines, business closure, and account blocking.

Obtaining a cryptocurrency license is a challenging yet crucial process that requires significant effort and investment. Companies looking to operate within the legal framework and expand their services can benefit greatly from the opportunities provided by a license. Choosing a jurisdiction and preparing for licensing are essential steps toward building a stable and successful crypto business.