What are the best countries to run a legal cryptocurrency business?

0
Symbiosis

In 2021, it has become clear that the cryptocurrency industry will not be able to avoid regulation. To some extent, supervisory authorities in almost all major countries have paid attention to the developing market.

The legal status of cryptocurrencies varies widely across jurisdictions. While some states are waging fierce wars with cryptocurrencies and tightening their regulations, there are countries with the opposite approach that support the development of blockchain projects. Thus, in some countries, operations with cryptocurrencies are officially allowed. They are generally treated as a commodity or an investment asset and, for tax purposes, are subject to applicable law.

Below we will look at the most favorable countries to register and run a crypto business.

Lithuania

Lithuania has a fairly user-friendly and fully regulated legal environment for setting up fintech companies, companies offering cryptocurrency exchange services and crypto wallets.

The Central Bank provides comprehensive support in the development of financial technologies and non-banking services to make payments. Moreover, Lithuania is known for supporting crypto startups and helping their development in any way possible. In this regard, the procedure for obtaining cryptocurrency licenses has been simplified.

If we talk about the basic requirements for the license holder, the following should be noted:

  • the development of AML policies and rules and their application within the framework of the activity;
  • The KYC of each client must be carried out without fail, including obtaining data on the origin of the client’s funds;
  • have its web resource;
  • the company must obtain authorization from the financial intelligence unit.

The license for the exchange of cryptocurrencies in Lithuania implies that all operations carried out by the company and the relevant documentation are carried out under the instructions of the regulatory authorities.

El Salvador

In June of this year, the first country in the world to adopt Bitcoin as a state currency appeared – El Salvador. Now, customers from different countries can conduct business, purchase goods and services, invest in bitcoins, as well as legally trade and profit from cryptocurrencies. In this regard, a cryptocurrency license in El Salvador is an excellent choice for an investor.

El Salvador offers many advantages for registering a cryptocurrency business:

  1. A growing economy.
  2. Small taxes.
  3. Financial democracy. The transition to digital currency has made access to electronic transactions democratic.
  4. There is a possibility of direct cooperation with foreign investors. Among the possible investments that a company registered in El Salvador can attract are contributions from the creators of well-known payment platforms and Bitcoin miners.

The jurisdiction of El Salvador allows foreign investors to do business freely, legally make a profit in cryptocurrency, and spend it.

Estonia

Over the past few years, Estonia has repeatedly been recognized as one of the best countries to do business in the field of blockchain and cryptocurrencies.

If licensed, a company in Estonia can provide the following list of services:

  • electronic wallets;
  • cryptocurrency exchanges;
  • cryptocurrency payment system;
  • encrypted ATM.

However, it should be noted that as of February 1, 2022, an update to the Prevention of Money Laundering and Terrorist Financing Act is expected to come into force in Estonia, which in turn establishes more licensing requirements strict. Thus, according to the invoice:

  1. The definition of “virtual currency service” will be expanded.
  2. Authorized capital, licenses and operating costs increase.
  3. To obtain a financial license, an applicant will need to provide a broader list of additional documents and information.
  4. Stricter requirements will be imposed on the members of the management board, in particular with regard to their experience and their limited participation in other companies.
  5. The list of grounds for refusal to issue a license and cancellation of a license will be expanded.
  6. Providers will need to collect data about the sender and receiver of funds and share it with all parties to the transaction when the exchange or transfer of cryptocurrencies is complete.

Britain

In the UK, a fairly popular procedure is to obtain a cryptocurrency license by anyone who wants to provide services related to crypto assets in the country.

To enter the local market, crypto exchanges and crypto wallet service providers must obtain a UK cryptocurrency license from the Financial Supervision Authority (FCA), which monitors the work of cryptocurrency companies. the cryptosphere.

The regulator controls all parties involved in the acquisition and sale of cryptocurrencies using the “Know Your Customer” (KYC) procedure. In addition, due diligence procedures (CDD) are used to identify risks and provide measures to eliminate identified risks. These measures are aimed at combating money laundering and the financing of illegal manipulations in the cryptocurrency sector. A cryptocurrency license in the UK helps to properly provide various business functions.

Canada

According to the latest change in Canadian law, local and foreign crypto platforms and companies using crypto assets in their activities are classified as money services businesses (MSBs), which must fulfill all obligations, including the implementation a comprehensive compliance program and registration with the Financial Transactions Analysis and Reporting Center of Canada (FINTRAC).

When setting up a business in Canada, it is necessary to register with FINTRAC to transact with cryptocurrencies for the following types of activities:

  • Cryptocurrency mining allows investors to receive common cryptocurrencies and then trade them.
  • Trading Activity – Cryptocurrencies can be traded like commodities under Canadian law.
  • Payment Services Business – Investors can set up a business offering cryptocurrency payment services in Canada.
  • Crypto ATMs – installing ATMs that exchange cash for cryptocurrency is also allowed in Canada.
  • Cryptocurrency exchange platforms can be set up under Canadian law.

As well as any activity in the field of financial services, including those provided to residents of Canada from abroad, requires the business entity to register with FINTRAC (obtain a license), regardless of the province.

Obtaining crypto licenses in offshore jurisdictions is also gaining popularity. The United Arab Emirates, Labuan, Cayman Islands, Philippines, Mauritius and Vanuatu have taken significant steps in this direction. In 2022, many more countries are expected to officially join the crypto community. The adoption of legislation regulating activities related to cryptocurrencies allows States to control the circulation of cryptocurrencies as much as possible, to combat money laundering and the financing of terrorism, as well as to create a safe environment. to invest funds.

By obtaining a licensed status, crypto exchanges and other service providers gain trust among users. It is also positive that if there are official rules of the game, mainstream regulated investment and payment institutions will be able to join the crypto community, which previously could not do so due to regulatory hurdles.

Get your daily recap of Bitcoin, Challenge, NFT and Web3 news from CryptoSlate

It’s free and you can unsubscribe at any time.

Invited message by Denys Chernyshov from the lawyer

Denys Chernyshov is a lawyer, founder and CEO of Eternity Law International, a cryptocurrency trading advisor. Denys is an expert in the field of taxation, licensing, legal services for banking and investment, as well as in the protection of the interests of natural and legal persons before international courts.

Read more →

Get one Edge on the Crypto Market 👇

Become a member of CryptoSlate Edge and gain access to our exclusive Discord community, more exclusive content and analytics.

On-chain analysis

Price Snapshots

More context

Sign up now for $19/month Discover all the benefits

Share.

Comments are closed.