Please note that the below is an overview intended for educational purposes and is not legal advice. Please consult with a local law firm to advise you on your specific circumstances. The legal environment for crypto continues to evolve and new interpretations of existing statutes to these emerging questions of law are occurring every month.
How to get a crypto license
Those seeking to obtain a crypto license have to first familiarize themselves with crypto regulations across the world. Before settling on a suitable jurisdiction, you have to do enough research to gain a good overview of the regulatory standards in place across the globe. That said, they are subject to constant change so perhaps arranging a consultation with an advisory firm is a good idea to get a general overview of current approaches.
This will help you decide which jurisdiction will be most suitable for your needs and, most importantly, if there is a possibility of rules and requirements suddenly changing. There are several countries that have defined rules regarding crypto assets and some have even implemented specific regulations in recent years. Among the most popular countries that people choose when they want to register for a crypto license are the United States, Hong Kong, Lithuania, Estonia, and Poland. All the countries have different requirements and different costs of setting up shop there. For instance, a crypto license in Hong Kong can cost you anywhere from €15,000 to €35,000.
Do you need a license for crypto business?
Yes, you do. However, there are different rules and regulations in place. On a broader scale, there even are different definitions and legal implications of crypto licenses. For instance, some European countries equate permission to deal with cryptos and your company’s entry into the national cryptocurrency register to you obtaining a license. Even though rules and stipulations differ from country to country, there still are many common requirements, including:
- ID verification from all key staff members;
- Complete and thorough compliance with AML regulations and policies;
- Corporate bank accounts opened by a legal banking institution.
There exist countries that require you to obtain different licenses based on what your main purpose is. A crypto exchange license is one thing and a crypto wallet license is a different thing.
How to start a small crypto business?
As it stands, this is a multi-faceted question. The best way to approach it is to divide it into different steps and see how the path through each of them goes.
- Step 1: Idea. You have to have a basic understanding of what your project is and what it does that is so important and unique. If you don’t have a clear-cut vision, just wait until it emerges. With no clarity in mind, you won’t know what to prepare and what steps to take.
- Step 2: Name. Having a catchy name amounts to at least 20% of your chances of success.
- Step 3: Jurisdiction and structure. Based on which jurisdiction works best for you, you need to pick a legal structure that will apply to your business. While an LLC works in most parts of the world, other options are still in existence and they might actually yield more advantages than you expect them to.
- Step 4: Secure funding. There are different ways of doing so, but the key thing is that you need to generate enough money to get you through the initial stages. All stages that occur before you start making any real profit.
- Step 5: Location. Either establish a virtual office or open a real one, depending on what your goal/service is. There are many things to take into consideration and you can always save money along the way.
- Step 6: License. Here is the step that is hardest and most challenging in many cases. It is time to fill in for a license. The best advice here is to seek outside help because an experienced enough firm will help you save time and money.
- Step 7: Bank account. Open a corporate bank account and take care of all the related matters.
- Step 8: Hardware and software. Make sure that everything is in place and ready to go.
- Step 9: Open for business. You will have to adjust on the fly many times and you will have to do many things that you have never done before. But, if you are diligent enough, you will persevere. You will be as successful as you want to be.
What is the scope of activity for a crypto business?
The scope of activity can vary depending on your needs. But the ideal situation is that you are in a clear-cut field. There are many different definitions and different scopes of operations in different jurisdictions. The average jurisdiction allows a licensed crypto company to do the following:
- Engage in crypto-related activities on a broad scale;
- Exchange fiat to crypto and crypto to fiat;
- Provide broker services;
- Act as a digital wallet.
There are many different smaller subsectors of crypto that only fit loosely in the above activities, but do not worry. You will find the right way to categorize your company’s main purpose and define its scope of operation. With that, you will be able to legally offer your service or product to your clients.
How do I register my cryptocurrency company?
Usually, it is a multi-layered process that requires preparation and dedication. Let us use Lithuania as an example because it is a country that’s been making waves as of late. Here is how you obtain a license in Lithuania:
- Register a unique name that is not currently in use by any legal entities.
- Make additional preparations if you want to obtain a license remotely.
- Pick an address for your office and open a corporate account.
- Submit documents to verify the identity of key staff and stockholders.
- Send in an AML statement to enter your company into a local register.
The process of creating a business and registering your company can be greatly simplified if you choose to seek outside help. That might sound like a risky option, but it really isn’t. The more you will be able to delegate in the process of obtaining a license in this or any other jurisdiction, the faster you will be able to do it. This makes it cost-effective and increases the chances that the process will go smoothly.