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Registration of a crypto bank and obtain cryptobank license

Registration of a crypto bank and obtain cryptobank license

What crypto banks deal with, do they work in legal fiend, and how the crypto bank registration is carried put — read in our new material. 

What is crypto bank and how it works?

Crypto bank is a blockchain-based platform that deals with digital currencies and fiat pairs. It duplicates some parts of  stock and currency exchanges’ functions (exchange, transfer, converting, and cashing out), and also offers additional services:

  • p2p crediting;
  • deposits and cashback;
  • cards for withdrawal;
  • deferred payment;
  • custodial service;
  • converting digital currencies into fiat money;
  • acquiring;
  • cryptocurrency cashing out;
  • operations with securities;
  • token placement.

There is no a single work scheme and functionality, since operations depend on a specific jurisdiction, services provided on the platform, and its agreements with intermediates. 

Why do we need crypto banks?

Many have reasonable amounts of cryptocurrency stored on their accounts, and possibilities to use them are still rather limited. With the help of crypto banks, the crypto can be exchanged to fiat and vice versa, and even pay a smaller fee comparing to exchanges or stock exchanges. Another nice bonus — fast and convenient operations. Mobile banks provide an opportunity to legally pay with cryptocurrency, use virtual and real cards, work with partners and clients from various jurisdictions.

Crypto banks and regulators

 Obtaining crypto bank license and platform legality depend on a specific jurisdiction. In 2019, the Swiss Financial Market Supervisory Authority FINMA issues a banking license to the SEBA crypto bank, and in 2018, approved the launch of the Sygnum crypto bank company. The last one created digital payment token, relying on the Swiss bank. 

In Britain, Financial Conduct Authority (FCA) deals with licensing, and in the USA, the New York State issues bit licenses to crypto banks. It is also possible to get financial license and register as a financial service supplier. 

The Federal Financial Supervisory Authority in German issues permissions to provide services connected with cryptocurrency. 

How to register a crypto bank dealing with cryptocurrencies?  

Registration of crypto bank begins with selecting an appropriate jurisdiction. Then we should make sure that a company corresponds to normative requirements in the county where we apply, or adapt our platform activity to current legislation. After that, the incorporating company gets a license.

There are several solutions enabling legal activity as a crypto bank:

  • Electronic Money Institution (EMI lets a licensed company issue electronic money);
  • Money Transmission License (license for money transfers);
  • license for activities on the provision of alternative payment methods.

In order to obtain E-money License UK, share capital must be €350 000, and for EMI license, financial estimates must be carried out to show that e-bank is solvent and can guarantee the compliance with the requirements to the capital.

What jurisdiction to register a crypto bank in? 

Singapore, Malta, Georgia, Japan are favorable to the cryptocurrency. To register a crypto bank, it’s better to analyze advantages and disadvantages of crypto-friendly countries. Everything matters: geographical location, potential clients segment, normative base, board member status (resident). If you plan to concentrate your activity in Europe, you do not need crypto license in Belize or Hong Kong.  

Do crypto banks have future?

The number of crypto users is growing, therefore, similar platforms will be in demand. Their development is not too rapid, since in numerous countries the crypto market is not legally regulated. But tendencies are radical: cryptocurrencies and other digital assets are considered as possibilities for investment. In order to gain trust and become a full-fledged player of the traditional banking system, get a regulator permission, and guarantee the security of funds to their users. 

Electronic currency is a new milestone in the development of digital currencies, requiring legal conduct. Work with cryptocurrencies must be carried out in the legal field. The SBSB specialists consult their clients and provide services for crypto banks licensing in European countries (Germany, Spain, Italy, Czechia, Poland, and Portuguese.

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