To begin with, let’s figure out why the governments of different countries offer crypto organizations to obtain a license. So, government agencies are not against the crypto industry but want to protect their citizens from possible risks. The fact is that many scammers work at risk and wish to obtain financial resources and citizens’ data fraudulently. Government agencies offer people in business to pass an inspection and obtain a work permit to prevent this.
Each country sets its own rules for regulating the crypto industry. Some countries, such as China or India, completely ban such assets, while the US, UK, and EU countries ask crypto organizations to pass verification and obtain a cryptocurrency exchange license. If you want to work in this industry, you may be wondering how to do it and how much it might cost.
What are the benefits of obtaining a license for crypto companies? According to some reports, about 110 unregistered crypto organizations are operating in the UK today, and their number continues to grow. In this country, the license is advisory. However, most companies decide to obtain a work permit. Why?
Firstly, most countries require that only licensed companies operate in their territory, and having a license in the UK opens the door to many other countries. If you refuse the idea of obtaining a license, your organization may be recognized as a fraudster, which means that your platform will be blocked, and the owner will get into big trouble with the law. In the future, obtaining a license will be almost impossible, and you will have to pay a rather large fine. Second, investors are unlikely to be willing to invest in your business if you don’t get a license. They know that the crypto business is associated with many risks, and having a permit indicates that you are ready to fulfill your obligations. In addition, investors and clients know that if they have a license, they will be able to resolve disputes in the legal field.
Thirdly, the presence of a license is the leading indicator of a company’s good reputation, which allows it to form the necessary level of trust. It will enable you to maximize your customer base.
What does the cost depend on?
Once you have assessed the benefits of obtaining a license, you need to understand how much it will cost. It is worth saying that this will consist of two main cost items: the services of specialized lawyers and state fees.
It will be challenging to obtain a license without a legal education. It is because you must collect a large package of documents and check your company’s readiness for inspection by regulatory authorities. Correctly assess the risks and draw up a well-thought-out business plan. Doing this is possible if you have specific knowledge and skills. You can give the receipt of a license entirely on a turnkey basis, and then your participation will be reduced to a minimum.
Each country sets its requirements for authorized capital and state fees. The fee amount is usually fixed and is independent of the organization’s size. In addition, you need to set aside a lot of money for additional expenses, such as translating documents under an apostille, creating an electronic signature, or renting an office.
Before you decide to obtain a license, we advise you to contact specialists who will calculate the exact cost of getting a permit. If you give a turnkey license, the price will include additional fees. The cost will remain the same if any difficulties arise, provided that you follow all the recommendations of the lawyers.
On average, a license costs 2,500 to 5,000 US dollars (excluding government fees). Our experts will tell you how to save money if your budget is limited and what you need to pay attention to first.The time it will take to obtain a cryptocurrency license depends on the jurisdiction you choose.
How can you save?
There are several easy ways to save money. Firstly, the amount of the fee and the minimum amount of authorized capital are different in all countries, so you can choose the jurisdiction where the requirements are minimal. So, most startups choose Lithuania or the UK, as the conditions here are minimal.
Another way to save money is to take on some responsibilities when obtaining a license. You can not give a turnkey license but take part in licensing. So, you can choose the premises for the office yourself or participate in selecting key employees. Most jurisdictions set requirements for a director, an anti-money laundering officer, and other key personnel. They must not have a criminal record, but at the same time, they must have a good education, work experience in a similar position, and an impeccable reputation. Finding such specialists is sometimes quite tricky and can take a long time.
It is worth saying that it is also not worth saving much on licensing, as this may lead to the fact that government agencies may have questions. In addition, you need to look to the future and understand what taxes you will have to pay, how long it will take for licensing, and what kind of regulation you will have to face.
Today there are not many countries that issue crypto licenses; among the most popular of them are:
- Great Britain;
- USA and some others.
Each sets rules for licensing and regulating the crypto industry, so the choice must be taken very carefully.
However, they all have standard features. To obtain a license, your company must be registered in your jurisdiction. You must comply with anti-money laundering requirements. You cannot service anonymous transactions (except in Poland, where anonymous transactions are allowed for amounts not exceeding 1,000 euros). You must verify your clients and ask them to provide documents confirming their identity and place of residence.
You must also open an account in a local bank and put the entire authorized capital in full. Many banks consider the crypto business to be too risky so you may get a few rejections.
The choice of jurisdiction is one of the most critical steps in creating any crypto organization because it will affect the regulation rules, reporting requirements, licensing costs, and taxation features.
The choice of jurisdiction depends on many factors, but the most important of them are:
- Authorized capital;
- What services do you plan to provide;
- How much money are you willing to spend on licensing;
- How you plan to comply with anti-money laundering regulations and more.
Particular attention should be paid to taxation issues. After getting a work permit, you must pay taxes regularly. The lowest corporate tax rate is in the UK, but there may be additional payments, which significantly complicates the understanding of taxation. In Estonia, there is only one smelter – you pay 20% of the profit.
To choose the best jurisdiction for your company, you should contact CryptoLicense specialists for help. They will carefully analyze your company’s activities, tell you about the prices of licenses in different countries, conduct a full consultation and answer possible questions.
If you want to work legally, honestly, and openly, you must get a work permit. It is a rather complicated process requiring patience, specific knowledge and skills, and a willingness to give a large amount of money. The licensing cost depends on your chosen jurisdiction, so this aspect needs special attention.