Doing a crypto exchange business promises high yields. However, the times when it was free as wind are over. Now, there are three must-have pillars of doing this business: a crypto exchange license, KYC (Know-Your-Customer), and AML (Anti-money laundering). Compliance with these major points almost always guarantees that a good business idea will win. The entire freedom and flexibility of the environment foster the success of a good crypto exchange project.
If you have doubts about whether you should get a license or can skip it, it is almost certain that professional consultation is needed. It is essential to stay on the safe side when oversight authorities enter the game. Let’s review the reasons why a crypto business actually needs to get a crypto license.
What Is a Crypto License?
At a glance, a crypto license is an authorization from the state bodies that allows companies and individuals to conduct specific types of transactions with cryptos. In most countries, it is an essential element of the regulatory regime creating a safe environment free from money laundering and other finance-related crimes.
However, there is one nuance. In some countries, you may not find a separate crypto license in the legislation. This doesn’t mean you can’t enter this market without facing the risk of severe fines. It only means that it will not be a license in its traditional meaning. This will be an authorization and inclusion in the register of authorized subjects who are allowed to carry out specified transactions with the cryptos they applied for.
Yes, the crypto world is as complicated as it may seem to be. Some countries still remain a bit prejudiced about it and don’t want to introduce a separate license for cryptos. However, it is crystal clear that cryptos and Blockchain will remain an integral part of the future global economy.
If you want to become a part of this crypto world and feel frustrated about the legal requirements in your considered destinations, contact professional crypto lawyers. They will help to overcome all hidden pitfalls.
Reasons behind Licensing in the Crypto World
Aside from the strict rules any state likes to impose more or less, practicality is the major reason for licensing in the crypto world. It is explored through many aspects:
- Legal transparency. Licensing is a major precondition for the legal certainty and transparency of a crypto business. It secures a company from being in conflict with the regulatory or even prosecution authorities.
Nowadays, the mere fact of the absence of a crypto license may result in severe consequences for a business, including criminal liability. From the point of regulatory authorities, the absence of a license when necessary is a wide avenue for fraud. Being accused of scamming bears long-lasting consequences not only for the company itself but for its owners as well.
- Investor and customer trust. You will have to spend much more on promotion if you don’t have a license. Fewer investors and customers are ready to risk their money for an interesting but suspicious project. On the other hand, a company that is properly licensed automatically gets more trust from investors and customers. It is deemed to be more reliable and the invested funds are more secured.
- Market expansion. A crypto license provides instant access to the local and sometimes even regional markets. For instance, once you get a crypto license in Poland, you can offer your products and/or services across the EU! This simplified authorization is the consequence of implementing a joint regulatory regime spanning the entire EU. If you plan to explore this market, professional crypto lawyers will be glad to consult you about the easiest entry point.
- Access to banking services. The crypto world is not isolated from the traditional banking system. A business that omits to get a license will definitely face negative consequences of this decision later.
No one reputable bank will open a bank account to a company that fails to comply with licensing and other applicable regulatory regimes. Even more, reputable banks will cooperate with regulatory and prosecution authorities against non-licensed or otherwise suspicious crypto companies. This is an important thing to be mindful about.
Types of Activities Subject to Licensing
Of course, the exact list of activities subject to licensing varies from country to country. However, there is some general approach followed in most jurisdictions. It covers all of the most widespread transactions with cryptos. These are, among others:
- exchange operations involving cryptos and fiat currencies;
- ICOs;
- wallet service providers;
- payment processing;
- advisory services.
If the digital assets you offer have the signs of securities, you definitely need a license to operate legally in the market. Breaching this rule will have very strict fines and even criminal liability. If you need a more detailed assessment of your business strategy and whether you need a crypto license for it at all, contact professional lawyers instantly.
Bottom Line
Remaining 100% compliant with the applicable regulatory regimes is essential for ensuring the overall reliability and profitability of any crypto business. A license plays a crucial role in this course, adding credibility to a company automatically and a piece of mind to its owners.
If your business is properly licensed, it doesn’t risk paying severe fines and can proceed with its transactions across large markets, such as the EU, USA, or Canada. If you have ambitious business plans and need professional assistance with bringing them into reality, contact experienced crypto lawyers swiftly.
