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Cryptocurrency exchange licenses are becoming increasingly necessary in the ever-expanding crypto landscape. With the growing number of cryptocurrencies, applications, and projects, the number of exchanges has also skyrocketed. However, the legal aspect of these exchanges has become a major concern in the past five years due to a surge in scams and frauds. To ensure legal operations of these platforms and to instill trust in users, obtaining a crypto license has become mandatory. Some countries even require licenses from specific bodies.
In light of this development, we have decided to provide a quick overview of the various types of cryptocurrency exchange licenses, as well as the registration needs of cryptocurrency exchange businesses including requirements, processes, and how it works.
Different Types of Cryptocurrency Exchange Licenses
First, there are three major types of cryptocurrency exchanges, including:
Centralized exchanges: Exchanges that are centrally located function similarly to conventional stock markets in that the exchange mediates transactions between buyers and sellers. There are two distinct types of cryptocurrency exchanges: those that only deal in cryptocurrency and those that deal in both fiat and cryptocurrency.
Decentralized Exchanges: These exchanges operate without a central authority or clearinghouse are more in line with the ethos of the cryptocurrency sector because they cut out the intermediary and facilitate trade directly between buyers and sellers.
Hybrid exchanges: They attempt to combine the best features of centralized and decentralized markets, offering the convenience and liquidity of the former while maintaining the anonymity and safety of the latter.
Different types of cryptocurrency exchange consequently drive different licenses to cover different business operations, products and services. In terms of cryptocurrency exchange licensing, there are two major categories:
- The first group includes specialized Cryptocurrency license that are put in place by authorized entities to control activities relating to the exchange of cryptocurrencies, like in Estonia and Japan.
- The second category consists of conventional licenses that, in places like Hong Kong and the USA, indirectly control various financial activities, including those connected to cryptocurrency.
As the crypto landscape continues to grow and evolve, the importance of obtaining proper licenses for cryptocurrency exchanges will only increase. It is fundamental for exchanges to comply with these legal requirements to boost their reputation and attract more users using their platform.
Registrable Jurisdictions for Cryptocurrency Exchanges
The following jurisdictions are the most popular and top-notch options for obtaining licenses for cryptocurrency exchange that we cover in our licensing services:
- Lithuania
- Czech Republic
- Estonia
- Slovakia
- Poland
- Portugal
These jurisdictions have become popular options even for major cryptocurrency exchanges. Being licensed crypto exchanges in these jurisdictions means placing your exchanges in the same ballpark with the established one. More jurisdictions would be covered in our licensing services.
How to Obtain a Cryptocurrency Exchange
To summarize, obtaining a cryptocurrency exchange license typically involves the following steps:
- Registering a business in a selected jurisdiction. It is important to note that top exchanges frequently include a number of businesses with shared tasks for risk management and tax optimization.
- Registering accounts for company’s business activities.
- Appointing specialist personnel, such as an AML officer to manage anti-money-laundering initiatives and a compliance officer to guarantee compliance with other regulatory requirements.
- Acquiring the software and hardware required for running the crypto exchange
- Gathering and assembling the paperwork required to carry out the exchange’s activities and operations.
We have streamlined the licensing process so you can run your crypto exchange business as soon as possible. Our cooperation would be efficient and definitely result in an actual license for your cryptocurrency exchange operations.
Complying AML Requirements
To open a cryptocurrency exchange, it is important to thoroughly examine the AML legislation of the chosen jurisdiction. In general, AML requirements for cryptocurrency exchanges include conducting complex risk analysis, providing regular staff training, drafting internal certificates to minimize money-laundering risks, accounting, reporting suspicious transactions, and notifying authorized bodies of such transactions.
For more information on the specific conditions for obtaining a cryptocurrency license in a particular jurisdiction, please refer to our homepage articles based on selected jurisdiction. Our company offers a service package that includes legal support for obtaining a cryptocurrency exchange license at a reasonable fee and within a short timeframe. You can contact us via phone or email to purchase our services.
Lithuania
Lithuania offers Cryptocurrency Exchange License and Depository Currency Wallet Licenses. You can even request these two license types simultaneously. Brokers enjoy good financial conditions in Lithuania including the EU’s lowest business tax is 15% and the fast license issuance.
Lithuania once had the lowest company requirements. After tightening Estonian legislation, the government saw the rapid rise of Estonian cryptocurrency companies and tightened crypto asset regulation. To increase transparency and regulation, the AML statute was revised.
As per 1 January 2023, the minimum capital for registration rises from Є2500 to Є125000 and needs a senior management residing in the country, when previously all employees might be foreign citizens.
Czech Republic
The Czech crypto license has four sorts, depending on your company’s commercial activity: classic crypto-crypto exchange, cryptocurrency exchanges and exchangers, crypto-fiat exchange, and crypto wallet services.
The country’s National Bank issued a paper “Security of Internet Payments and Cryptocurrency”. This paper applies EU laws to virtual currencies without Czech Republic constraints. There would be no cryptocurrency laws passed in the near future, so we can settle it here for now.
This license has 5% income tax, no residency requirements, and no limits in cooperating with banks in the Czech Republic, which offer very good service rates. AML/KYC rules, business plans, a real office, the owners’ pristine reputation, reporting, and monitoring have become basic requirements for cryptocurrency exchanges registered and operating in Europe.
Estonia
The current Financial Intelligence Unit (FIU) regulations combined numerous licenses into Virtual Service Providers. It covers bitcoin exchange, wallet service, and payment systems.
Estonian licensing started in Q1 2020. The latest addition to the Anti-Money Laundering and Counter-Terrorist Financing Act requires cryptocurrency enterprises to open a physical office, provide local management, and present documents to the regulator.
Later, the government passed an AML amendment bill at the end of 2021. Authorized capital grew considerably. Consequently, the registration capital has now become Є100,000 for crypto wallet services and Є2,500,000 for crypto-asset trading services.
These improvements increase transparency and reduce risks, but they complicate licensing, which has generated a huge exodus of investors from the country to more supportive jurisdictions.
Slovakia
Cryptocurrency enterprises need two licenses: one for cryptocurrency trade and one for wallet services (maintenance and storage). Slovak cryptocurrency regulation and licensing are stringent. KYC and AML laws govern licensing and regulation. All regulators can obtain corporate data.
Slovakia has two types of cryptocurrency companies: LLC (Limited Liability Company) with a minimum registration capital of 5,000 and joint stock company with a minimum registration capital of Є25,000.
Slovakia start regulating in March 2018. Laws that tax bitcoin profits. Despite rigorous constraints, most investors like the Slovak crypto license since it requires no citizenship requirements, money flow limitations, or currency controls. Agent schemes and good bookkeeping can lower the 22% tax to 0.5% here.
Poland
In Poland, cryptocurrency exchange or platforms must register with the Cryptocurrency Registry to legally conduct/facilitate crypto-crypto exchnage, crypto-fiat exchange, and maintain and store cryptocurrency balances or wallet services.
Poland became the first country in EU to legalize cryptocurrency. The government has bilateral agreements with 84 nations around the world to avoid double taxation. Hence, the country confirmed its tax-friendly status for crypto-business.
Poland implemented the Bitcoin Registry and crypto-sector regulation on Q4 2021. A corporation must also meet simple procedural criteria and register as soon as possible. The country’s law and EU AML/CTF requirements apply with Minimum registration capital of Є1000 zlotys. At this point, crypto exchanges and other businesses providing crypto-related products and services must follow EU regulations.
Portugal
Bison Bank was granted Portuguese cryptocurrency wallet/storage and trading permission in April. On Thursday, the Portuguese central bank (Banco de Portugal) granted Bison Bank a VASP license. Bison Bank is set to establish Bison Digital Assets to trade virtual/digital assets
Bison Digital Assets would become the first Portuguese bank-owned legal entity authorized by Banco de Portugal to provide crypto trading and depository services. The Portuguese government is discussing blockchain technology and cryptocurrency due to the rapid growth of Fintech.
Due to rising Bitcoin prices, ICO interest in Portugal and other EU countries, and market capitalization, these technologies have garnered public attention in recent years. Before starting operations, Portuguese cryptocurrency creators or companies that provide cryptocurrency products and services should register with Banco de Portugal. These include all kind of crypto exchanges, crypto wallet transfer services, and custom wallet service providers.
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