What is a license for crypto activities?
Even today, a number of countries continue to ignore the existence of cryptocurrencies, some even try to ban this instrument. But there is a list of progressive countries that have already developed a legal framework for the control, regulation and licensing of the crypt market. As part of the regulation, states introduce mandatory licensing requirements for crypto activities. The license is beneficial for all market participants, as clear rules of the game protect the interests of all parties. Licensed work means more transparency, legality and reliability of operations.
Types of licenses for working with cryptocurrencies
Licenses for working with cryptocurrencies differ depending on the specific type of activity:
- Exchange of cryptocurrencies;
- Organization of the cryptocurrency exchange;
- Brokerage activities in the sphere of cryptocurrencies;
- Issuing a cryptocurrency.
From the whole list of activities we can distinguish common for the entire financial market formats of work financial advice and trusted asset management. Such activities fall under traditional financial licences. But just like working with crypto, it requires a special license in most jurisdictions. In some cases, it is an electronic licence with a digital signature.
When obtaining a crypto license, it is important to globally separate two types of activities:
Work exclusively with cryptocurrencies. Crypt + fiat money, for example, transactions with US dollars.
If the activity consists only in the exchange of cryptocurrency between each other, without the use of fiat money (most often US dollars), then a normal crypto license is enough to operate. For exchange and other transactions using any legal fiat money, a separate license is required. Crypto licenses can also be divided by terms. In most cases, the license is issued for a limited period and requires a subsequent renewal. In some cases, the renewal of the permit is automatic if all the requirements of the regulator are met.
To counter money laundering, regulators in all jurisdictions and banks impose additional requirements for clients dealing with cryptocurrencies. Depending on the jurisdiction, the details of the AML requirements differ, but as a rule, KYC and AML policies are always needed to counter money laundering. In addition, the company must have qualified managers aml officer, compliance officer and internal auditor. Qualified managers are responsible for compliance with all AML requirements and counteract money laundering and monitor compliance with other regulatory requirements.