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Where to get a cryptocurrency license

27 november 2019

The cryptocurrency market is being regulated poorly. Only a few countries allow you to obtain a license to work with cryptocurrencies, since it has its own specifics, and cryptocurrencies themselves are difficult to identify: in some countries they are recognised as property, in others - as exchange assets or means of payment.

Contents

Why obtaining a license is important for the crypto business
Where to get a license
Obtaining a license in the USA
Obtaining a license in Japan
Obtaining a license in China
Obtaining a license in Europe
Great Britain
Estonia
Switzerland
Belarus

Why obtaining a license is important for the crypto business

Legalisation of your business protects user data and finances at the legislative level. The lack of licenses, on the one hand, allows you to maintain anonymity, but on the other hand, the company provides scope for money laundering and other fraudulent activities. Companies operating in the legal field oblige their customers to undergo the verification of identity established by law in accordance with the KYC and AML policies. Unlicensed companies working with cryptocurrencies do not necessarily require user verification.

For the functioning of companies without appropriate licenses, there are special offshore zones that do not fall under the current restrictions of the governments. Therefore, if any violations or fraud of users are detected, it is impossible to resolve the issue through a state court, since offshore companies are outside their jurisdiction.

Where to get a license

In order to obtain a license, you must contact the appropriate state body if it provides licenses for working with cryptocurrencies. Who exactly is to be contacted depends on what kind of activity the company is engaged in. If it is a stock exchange, then it’s competence of a commission on securities and similar structures. If the company is engaged in ordinary trading activities, i.e. provides services or sells goods, the tax authorities are responsible for regulating the activities of such firms.

For each individual government or a state, when it comes to the USA and Europe, which have legislation at the EU level, its own procedure for licensing cryptocurrency activities and requirements are put forward by the company to obtain the necessary licenses.

Many countries have not decided on the regulation of the cryptocurrency market and have not yet established specific rules for conducting transactions with digital money. But some countries have developed laws and allow licensed activities in the state.

Obtaining a license in the USA

There are regulatory features in the US market that are related to differences in legislation in different states.

The main regulatory authority for controlling financial trading in the United States is the United States Securities and Exchange Commission (SEC). SEC establishes the requirements for the operation of crypto exchanges in the territory of the American state. The U.S. Internal Revenue Service has identified cryptocurrency as a taxable form of ownership.

But besides the rules established at the federal level, there is local legislation that applies only to specific states. For example, in New York, financial companies operating with cryptocurrencies need to get a special BitLicense.

For companies that act as intermediaries for exchanging cryptocurrencies for fiat money, you need to obtain a Money Transmitter License, and for exchanging some digital currencies for others - MSB License. In addition, companies will have to consider individual business requirements.

Obtaining a license in Japan

In Japan today, cryptocurrencies are officially a legal tender. Japan is one of the leaders in the cryptocurrency area, having created special legislation that regulates cryptocurrency activities separately.

Since 2014, The Japan Authority of Digital Asset has been operating in the country. Its task is to regulate the activities of cryptocurrency companies and exchanges.

Obtaining a license in China

Hong Kong is the leading region in the field of cryptocurrencies, a special administrative region of China that has introduced rules for regulating the cryptocurrency market. Hong Kong is one of the leading financial centres in the world.

The cryptocurrency regulation is carried out by the Securities and Futures Commission, which identified digital money as virtual goods. Therefore, the legal requirement relating to securities transactions does not apply to virtual currencies. As a result, companies are free to exchange one digital coin for another.

The situation with the exchange of cryptocurrencies for fiat money is completely different - in order to provide such services, crypto companies need to obtain a Money Service Operator license.

Obtaining a license in Europe

In accordance with the ruling of the European Court of Justice issued in 2015, cryptocurrencies are not subject to taxation. The peculiarities of the legal system of the European Union are that there are laws in force throughout the EU, as well as laws in force in individual countries.

Great Britain

The UK is also one of those countries that allow licensing of the crypto businesses. The Isle of Man, acting under British law has advanced especially far in that matter. It is considered one of the leading crypto centres in the world.

Under the jurisdiction of the Isle of Man, there are rules that allow you to reduce taxes for doing business. Currently, dozens of blockchain companies have registered here. The licensing rules and the procedure for registering crypto companies are established by the UK Financial Supervisory Commission (FSC). So far, the commission has not developed unified rules for regulating the activities of enterprises working with cryptocurrencies, since the market is still relatively young and is only developing. The only requirement established by the FSC is to help combat money laundering.

Estonia

Despite the small size of the country, Estonia is characterised as a stable economy that has an advanced attitude to innovations, in particular towards the development of cryptocurrencies and blockchain as a whole. Estonia attracts companies with loyal conditions for conducting companies in the field of electronic commerce.

The licensing procedure and company requirements are established by the Estonian Financial Supervision Authority EFSA (not to be confused with the European Food Safety Authority). The peculiarity of the license issued by EFSA is that it allows you to conduct activities not only in Estonia, but also in the entire European Union. It is also noteworthy that licenses are reviewed and obtained quickly enough: the procedure usually takes no more than six months.

Switzerland

Switzerland is among the first countries that have legalised cryptocurrencies at the federal level. One of the private banks in Switzerland issued its own cryptocurrency, which allowed it to provide financial, receivable and credit services to users around the world.

The cryptocurrency regulation and licensing of companies is handled by the main financial authority of Switzerland - the Financial Markets Supervision Service (FINMA). To obtain a banking license or work as an intermediary for financial transactions, you must go through the verification procedure with this service.

Switzerland has not established regulation for the cryptocurrency market in a separate law, therefore, activity is registered on the basis of current legislation, which covers all financial companies in Switzerland.

Belarus

Belarus became the first country that have fully legalised cryptocurrency activities. It was done by decree "On the development of the digital economy." Companies can obtain a license from the National Bank of the Republic of Belarus, and then carry out activities in the state.

Belarus was one of the first countries to issue its own independent cryptocurrency called Thaler. The republic also launched a single center for calculating cryptocurrencies.

The activity of cryptocurrency exchanges on the territory of the republic is carried out in accordance with the Rules for the activities of the crypto platform operator, which were issued by the HTP Supervisory Board. In order to conduct operations with digital currencies, companies need to become residents of the High-Tech Park.

Source

LetKnow.News

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