Business, Crypto

How to get a license to exchange cryptocurrencies in Europe?

Europe is home to a vast number of crypto enthusiasts. This industry is developing rapidly, and new opportunities for earning and using...

Written by Niel Patel · 5 min read >
Blockchain Technology and Cryptocurrency

Europe is home to a vast number of crypto enthusiasts. This industry is developing rapidly, and new opportunities for earning and using crypto assets are emerging; for example, you can pay for goods and services with their help. To work in this industry, you should crypto license. It will allow you to thrive and find new investors and customers.

Benefits of obtaining a license for your cryptocurrencies exchange

You must get a license to work legally, honestly, and openly. All companies operating without permission in the EU are recognized as fraudsters and blocked from the platform, and the owners have problems with the law. Thus, it is worth getting a license if you want to work and not wait for the regulators to come to you to ban your organization.

There are many scammers on the crypto market, so investors are more willing to cooperate with licensed companies, as they can be sure they will fulfill their obligations. The same applies to private clients. Today, people are more actively collaborating with organizations that have work permits.

Thus, having a license allows your company to advertise on various sites, attract new investments and thrive.

Main steps for entrusting a license

Each country sets its own licensing rules; however, we can highlight a few mandatory steps:

  • Think over the business model;
  • Choose a jurisdiction and register your organization here;
  • Check how your organization meets the requirements of state regulators and collect the necessary papers;
  • Open a bank account and pay state fees;
  • Apply for a license.

Each of these aspects is of particular importance, so discussing them in more detail makes sense.

Building a business model

Before you begin obtaining a license, you must think through the details of how your organization will function, from what services you will provide to the name and management architecture.

You need to create software that will help you serve customers. Special attention should be paid to the customer verification system and data security here. Government agencies in most countries require that you store information about all customer transactions, so you need reasonably ample storage.

In addition, you need to think through a business plan, where you need to pay special attention to financing, risk assessment, and compliance with AML policies. It will be good if your business plan is scheduled for 2-3 years.

Choice of jurisdiction and company registration

The choice of jurisdiction is crucial because the requirements for applicants, taxation, reporting, and much more will depend on it. Most countries allow foreigners to register a business, but they may require you to have a local anti-money laundering officer or director work for your company. The selection of key personnel is another crucial aspect. Your specialists must have an impeccable reputation, work experience in a similar position for at least one year, good qualifications, and no criminal record.

Verification of compliance with the requirements of government regulators

Each jurisdiction sets its requirements for applicants. Usually, they are concerned with compliance with KYC / AML policy, authorized capital, risk assessment, and other aspects. It is challenging to assess how ready you are to obtain a license independently, so it makes sense to involve independent experts. They will also check your documents and suggest what needs to be improved.After checking the requirements, you can quickly get a cryptocurrency license

Open a bank account and pay the fee

You must open a bank account where your authorized capital will be stored. This bank must operate in the territory of the jurisdiction where you want to obtain a work permit. The complexity of this stage lies in the fact that many banks consider the crypto business too risky, so they often refuse such organizations.

The amount of duty in each country is different, so it is worth knowing them in advance.

Apply for a license

After all the preparatory steps, you need to apply for a license. The term for consideration of your application in all jurisdictions is different; in Lithuania, it takes only 14 days, and in Estonia about a month. If the public authorities have questions or comments, they can extend this period by several weeks.

Popular jurisdictions

Today several jurisdictions in the EU are engaged in licensing crypto organizations; among the most popular are:

  • Lithuania;
  • Poland;
  • Estonia.

Each of these jurisdictions sets its own rules and requirements for applicants, different terms for obtaining a license, and taxation.

Lithuania

Among all countries, you can get a license in Lithuania the fastest. It can be done in a month if you think over the business model well. This country is suitable for large corporations and start-ups, as the requirements for authorized capital are relatively low.

The main requirements for the applicant are:

  • Registration in this jurisdiction;
  • At least one owner and shareholder;
  • Must have an anti-money laundering specialist;
  • Thoughtful business plan;
  • Compliance with KYC/AML policy.

To get a license here, you must carefully verify each client, avoid anonymous transactions and store all transaction data. If you notice any suspicious activity from customers or employees, you must report it to government authorities.

You can complete all the documents remotely and do not need to fly to this country. But, it would be best if you had a local office where anti-money laundering specialists would work.

There are 2 types of licenses – for wallets and exchanges. The choice depends on what services you plan to provide to your users. At the same time, the licensing conditions do not depend on your chosen license.

Poland

This country sets the minimum requirements for applicants. So, you need to ensure that your company members have no criminal records. You need to provide the relevant certificate to prove this. Also, your key employees must have the appropriate education, work experience of at least one year in a suitable position, and an excellent reputation.

You must obtain a PESEL – a unique tax number to obtain a permit in this jurisdiction. It usually takes about a month, so getting a license here is more extended than in Lithuania.

You can complete all the documents remotely, and there is no requirement for local employees, which makes this country even more attractive. The disadvantage is that the taxation system here is quite complex, and it can be challenging to figure it out. However, you should know that this country seeks to support medium and small businesses. Therefore it establishes tax incentives for them.

There is only one type of license. You need to enter the Register of companies that conduct crypto activities. It will give you the right to work legally in the country.

Estonia

Among the above countries, Estonia sets the most challenging requirements for applicants (local staff, significant share capital, more complicated AML policy, etc.), but this is more interesting for people who want to get a license. It is mainly due to a very favorable tax system. There are no hidden taxes here, and you must pay 20% of the profit.

Obtaining a license here takes about 14 weeks on average. It is because foreigners are required to obtain e-resident status to conduct business. Also, government agencies have more time to consider your application.

Estonia, like Lithuania, offered to obtain 2 types of license, but then it was decided to issue a single crypto license. It is worth saying that Lithuania is gradually changing the rules, as it wants to protect its citizens from money laundering, fraud, and financial terrorism. For example, in 2022-2023, more complex requirements for compliance with the AML policy, business plan, and staff selection will be introduced. In addition, it was decided to increase the fee from 3,300 euros to 10,000 euros.

The cost of a crypto license

The cost of obtaining a crypto license depends on your chosen jurisdiction. Each country sets its amount of state fees and requirements for authorized capital.

It is worth understanding that you can only do this with the help of lawyers. You can turn in these services on a turnkey basis and minimize your participation in obtaining a work permit. Or you can do some of the work yourself (for example, find an office and hire qualified staff), which will allow you to save a lot.

To know the exact cost of obtaining a crypto license, you can contact CryptoLicense specialists. They will conduct a comprehensive consultation, study your organization’s activities, suggest which jurisdiction suits you best and name the exact cost of services.

Conclusion

A license is mandatory if you want to work legally and develop quickly. It isn’t easy to do since you need to consider state regulators’ requirements and your business project’s development. You can choose the jurisdiction that offers the most favorable conditions for the development of your business, depending on the characteristics of your organization.

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