Crypto licenses

The launch and successful operation of a crypto project are preceded by the process of cryptocurrency licensing. Regulators in different countries aim to adapt the financial market to new challenges presented by virtual assets, making operations as transparent as possible. Digital Currency Licenses are essential tools for ensuring platform user safety and complying with cryptocurrency operation legislation for licensees.

Cryptocurrency Licenses

Crypto licenses are regulatory documents that companies dealing with issuing, selling, purchasing, exchanging cryptocurrencies, or offering cryptocurrency asset storage services must obtain.

Types of Cryptocurrency Licenses

The type of permission required from the local regulator depends on the services you plan to provide. The following official digital currency permits can be obtained:

• Crypto Exchange license permits the exchange of cryptocurrency pairs or cryptocurrencies for fiat currencies and vice versa. Such licenses regulate the activities of cryptocurrency exchanges;
• Crypto Trading permissions;
• Custody license must be obtained by blockchain providers offering virtual wallet services.

If necessary, crypto bank and crypto fund licenses can be acquired. Such permissions are required for financial institutions dealing with cryptocurrencies and offering services similar to traditional financial institutions.

Reason for Obtaining Cryptographic Currency Licenses 

The licensing procedure and crypto regulatory approvals confirm the legality of a crypto project’s activities in accordance with the legislation of the chosen jurisdiction. Operating within legislative frameworks while adhering to specific norms and security standards instills trust among users, partners, and financial institutions with whom you collaborate.

Cryptocurrency Regulations Worldwide

Regulation, blockchain licensing, and the process of obtaining cryptocurrency licenses differ in every jurisdiction. Choosing a jurisdiction is necessary depending on the budget, project objectives, and the markets where you plan to operate in the future. Lawyers will help in resolving this complex process and addressing issues that arise at all stages of licensing. They will analyze the details of your business, select the type of license based on the company’s specifics, and provide comprehensive support for your crypto project. SBSB specialists will choose the optimal jurisdiction for obtaining a license in Europe, Asia, Africa, and Latin American countries. Additionally, we assist clients in obtaining crypto licenses in offshore jurisdictions.

Blockchain Licensing in Europe

The procedure for obtaining Crypto Trading permissions varies across jurisdictions. In European countries, significant attention is given to the issue of money laundering. For instance, Articles of EU Directive 2018/1673 [AMLD 6] tighten cryptocurrency compliance requirements, adding cybercrime to the list of major offenses related to money laundering.

The local regulatory bodies in EU countries, where there are plans to standardize legislation and implement unified rules for crypto-assets [MiCA, Markets in Crypto-assets], currently have their own requirements for crypto projects. Each country operates with its regulatory acts and Cryptocurrency Compliance Documents.

For instance, in Lithuania, one of the popular crypto jurisdictions, regulations regarding cryptocurrencies, tokens, and ICOs are governed by provisions in three laws—securities, crowdfunding, and financial instrument markets. In Estonia, cryptocurrency regulations are outlined in the Law on Prevention of Money Laundering and Terrorism Financing and in the guide for a risk-based approach to virtual assets and virtual asset service providers. Currently, the most popular countries in Europe for obtaining licenses are Poland, Czech Republic, Slovakia, and Lithuania.

In Switzerland, the regulation of the crypto sphere and issuance of Virtual Currency Licenses are overseen by two organizations — the Swiss Financial Market Supervisory Authority [FINMA] and the Federal Tax Administration [SFTA]. The Law “On Adapting Federal Law to Developments in Distributed Electronic Register Technology” outlines the rules for licensing crypto businesses, cryptocurrency trading, and combating money laundering.

Different regulatory rules must be considered when choosing a jurisdiction and obtaining virtual currency authorizations. The SBSB team offers services for obtaining money transmitter license crypto in various European jurisdictions, including Estonia, Lithuania, Poland, Czech Republic, Bulgaria, Italy, Switzerland, Portugal, and Slovakia.

Cryptocurrency Regulatory Approvals in the Asian Region

Several Asian countries actively develop the cryptocurrency market and issue blockchain technology licenses, as well as those for associated projects. Singapore’s cryptocurrency market is governed by two legislative acts — the Payment Services Act and the Securities and Futures Act. The local regulator, the Monetary Authority of Singapore, issues three types of licenses — Money-Changing, Standard Payment Institution, and Major Payment Institution. The latter two allow dealings with cryptocurrencies.

In Hong Kong, there is the “Anti-Money Laundering and Counter-Terrorist Financing Ordinance,” and virtual assets are officially recognized as “virtual commodities.” A cryptocurrency exchange license for financial operations with virtual assets can be obtained.

Cryptocurrency Licensing in Africa

The regulator in South Africa [Financial Sector Conduct Authority] has classified digital assets as “financial products.” Crypto platforms are expected to obtain a special license for cryptocurrency exchange. This step is expected to protect users, allowing the regulator to enforce penalties if a crypto company fails to comply with the new requirements.

Cryptocurrency Licensing in Latin America

Many regulators in Latin American countries have shown a lenient approach toward crypto businesses. The active development of the cryptocurrency market in the region presents opportunities for foreign investors. The Venezuelan National Superintendency of Cryptoassets and Related Activities [SUNACRIP] has officially permitted the use of cryptocurrencies for international transfers. In Argentina, legal entities can currently conduct operations with digital assets without a special license, but plans are underway to create a legislative framework for regulating the digital asset market and licensing blockchain projects. Registering a company and obtaining a crypto license is possible in El Salvador, where Bitcoin is officially recognized as legal tender. In Panama, the use of digital assets is regulated by a separate bill in the National Assembly. After company registration, one can acquire permission to operate with virtual currencies in Panama.

Offshore Cryptocurrency Licenses

Registering in offshore zones is more cost-effective for businesses compared to other jurisdictions, which appeals to startups with limited budgets. Gibraltar allows operations of crypto exchanges. In Costa Rica, no permission is required to run a cryptocurrency business. The company registration process in this offshore jurisdiction takes up to 5 days. In Saint Vincent and the Grenadines, the cryptocurrency market is regulated by the Financial Services Authority. The regulator issues a license covering cryptocurrency exchange services, transactions involving digital wallets, and initial coin offerings [ICOs].

How to Obtain a Cryptocurrency License?

There isn’t a unified algorithm for obtaining cryptocurrency regulatory licenses as jurisdictions issue different permissions. The package of documents required, applicant requirements, and application processing times also vary.

Despite the requirements of each regulator vary, we can still outline some general conditions:

• reputation, education, and relevant work experience of owners, beneficiaries, and CEOs;
• company registration and legal address;
• hiring an AML (Anti-Money Laundering) officer and a Compliance officer;
• compliance with AML/KYC policies.

The Process of Obtaining Digital Asset Authorizations

The procedure for obtaining virtual money permits generally involves:

• choosing a jurisdiction and license type;
• registering the company;
• opening a bank account;
• ff necessary, hiring resident employees;
• preparation of documentation, policies, and software;
• submitting the documentation to the regulator;
• obtaining Cryptographic Currency Permits and launching the project;
• opening a bank account. 

If you need to obtain a cryptocurrency license, contact the SBSB team. We provide clients with comprehensive legal support — consultations, document preparation, and obtaining permits in the optimal jurisdiction for your business in any region worldwide — Asia, Latin America, European, and offshore jurisdictions. Reach out to us, and we’ll help you successfully launch your crypto project!