This booming era of cryptocurrency has bought opportunities for both investors and exchange owners. As you know that it is a new business concept, and information on acquiring a license is relatively less than in other conventional finance businesses.
On the one hand, digital currencies are known for their anonymity and decentralization, while on the other hand, the industry is emerging from the shadows. Governments see the tremendous potential of cryptocurrencies and are attempting to regulate them as per the compatibility of state rules as well as laws.
Therefore, centralized platforms (crypto exchanges) are seen as the crypto trade’s future. What are the requirements for obtaining a crypto currency license in Estonia, NYC or other states where its transactions are legal? Let’s have a look at the necessary precautions and potential problems.
Stepwise Guide To Apply And Acquire a Cryptocurrency License
- Choose a country to run your business in.
- Open an account with the collaboration of a financial institution.
- To prepare the papers, go over the mandatory documents.
- The regulatory authorities examine whether a business meets the standards.
- Pay applicable fees and taxes.
- Acquire a crypto license, which allows trading marketplaces to provide cryptocurrency-related services.
Where To Apply For License?
Despite giving legal status, every country has different legal requirements to fulfill for acquiring crypto licenses. We are providing the information below regarding Estonia and New York requirements.
As a fresh player, one must create a corporation and apply to FSAEE, to get a crypto license in Estonia, the home of European cryptocurrency exchanges. The KYC certification, incorporation documents as well as risk evaluation are all necessary. Talking about the final cost of license acquisition, it remains somewhere around 3300 euros.
Entities need to qualify for a BitLicense or a charter with authorization to do virtual currency commerce under New York Banking Law. While both authorizations are identical, a limited purpose trust corporation charter by the state of New York may provide some extra benefits.
Types of Crypto Exchanges
In the crypto world, centralized crypto exchanges are the most well-known and traditional. The most significant advantages are below:
CEX’s ease of use and excellent UI and UX, as well as its quick reaction.
Some of them require only an email address and a password before you can begin trading.
Decentralized crypto exchanges are an alternative to CEX because there is no single point of failure and no firm controls the assets. In contrast to traditional CEX, smart contracts usually help in automating transactions and trades. Also, this method is far safer because no security breach is possible due and its data can’t be manipulated.
It’s a mix of central platforms’ rapid transaction speeds and security assurance by keeping the private keys. Hybrid is a kind of new breed of cryptocurrency trading platform that is continuing in development.
Whom To Approach For Licensing?
You must have heard about fintech companies that provide support for traditional money digital transactions. There are similar kinds of agencies that know the ethical ways to acquire crypto licenses. They provide different types of legal support as well as documentation services necessary as per the law of a particular country. You need to hire a licensed consultant with a well-established network. They know how to execute the process flawlessly and faster. A reliable consultant may take up to 3-4 months for completing formal obligations like drafting, auditing and KYC.
From the above points, now you have information regarding types of crypto exchanges, their legal requirements and how to acquire them. Just find a location where crypto laws are highly liberated and start your business.