The crypto industry is growing continuously and is expected to hit about 13.2 billion in the next five years. Securing a cryptocurrency trading license is a crucial step for most entrepreneurs looking to invest in this industry by offering cryptocurrency exchange services.
This license gives businesses credibility and helps them attract traders and investors. It also helps promote compliance that legitimises crypto exchange.
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What a Cryptocurrency License Is
It is an important document that authorises entities to conduct regulated cryptocurrency businesses based on the laws of a certain jurisdiction. It allows business organisations to carry on the crypto businesses as depository wallet operators or exchange operators.
Who Requires the License
Whether you require a license depends on the requirements and regulations of the location where your entity provides services or is based.
Normally, if your entity deals with different digital currencies, you may need a VASP (virtual asset provider license) to work or legally provide services.
Examples of businesses and service providers that require a license include P2P trading, cryptocurrency exchanges, crypto ATMs, token legalisation, and custody services.
Types
The categorisation of cryptocurrency licenses differs across different jurisdictions. Here are some of the types of cryptocurrency licenses:
- Order execution: When companies execute orders for their clients in the market, they agree to sell or buy crypto for those clients. This may also entail subscribing to crypto on clients’ behalf.
- Custody & administration: Crypto custodians keep private keys, ensuring your assets are difficult to access. Service providers should keep records and even register crypto movements.
- Transfer services: This offers services for legal or natural persons. Cryptocurrency assets move from one account or distributed ledger address to another.
Get the License
The duration and complexities of getting a license depend on every country’s current regulations and legislation. But in general, getting one has become easier for businesses. Here are key steps that simplify the process of getting one:
Preparing for basic requirements: It is important to understand the basic requirements that crypto jurisdictions impose. This first step involves choosing between offshore and onshore types.
Creating and registering an entity: The registration task varies in duration and complexity based on the jurisdiction. Some jurisdictions allow businesses to register as crypto organisations without many prerequisites.
Acquiring initial capital: This step involves hiring your core workforce, raising initial capital, and buying relevant technologies, including software and hardware.
Preparing relevant documents: You will need different documents. This will include signed proof of CTF, KYC, KYT, and AML measures. You also need to present a document of your business bank accounting with minimal capital requirements.
Establishing a physical presence within the region: You don’t need an office to begin your operations because you can do most of the work online. But you must establish a physical presence within the region.
Applying and waiting: The approval should be finalised within 6 weeks to 3 months after paying the application fee.
In conclusion, licensing cryptocurrency services has become an important part of dealing with various digital assets, guaranteeing security and trust in the cryptosphere. The entire process of getting a license requires resources and effort, but the advantages it offers make the investment worthwhile.