The cryptocurrency sector is ever-changing. As its rules and regulations continue to tighten, getting a cryptocurrency exchange license has become an important part of businesses to operate legally.
A crypto license promotes compliance with local and global laws and signals credibility among investors and users.
However, navigating the licensing process is complex. Various jurisdictions have different costs, requirements, and timelines. This makes it important for aspiring cryptocurrency businesses to plan strategically.
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What a Cryptocurrency License Is
Regulatory authorities issue a crypto license to allow business exchanges to offer custodial services, facilitate trades, manage digital wallets, or provide brokerage services. Simply put, a cryptocurrency license gives you the go-ahead to provide a specific service in the cryptocurrency market.
Technically, you may consider creating a decentralized exchange that can be run without an official permit. However, without this license, you can’t acquire finances from investors and partner with dependable liquidity providers. Plus, depending on the country you operate in, you can incur penalties, too, which may dig deeper into your pockets and profits.
Why Get the License?
You need a permit because criminals sometimes use cryptocurrencies. They use them to finance terrorism and launder money.
AFM monitors whether business exchanges comply with AML legislation, which is often laid down in the EU legislation MiCAR (Markets in Assets Crypto Regulation).
You must check transactions for unusual activities and do a background check for all your clients. The AFM will assess how you handle this by investigating your business.
Types of Licenses
Different licenses cater to specific services and functions that crypto exchanges provide. Understanding the differences between the following types of licenses is important to get the right form of permit that will align with the needs of your company:
- Payment institution license
- Wallet provider license
- Cryptocurrency exchange license
Getting a Cryptocurrency License
The process of getting a permit varies from one country to another. However, some processes or steps remain the same. Some of these include the following:
1.Choosing a Jurisdiction
You will need to choose a jurisdiction where you can register your company. While at it, you must consider the country’s reputation in the crypto field, tax policies, regulatory requirements, and political stability. Popular options include Switzerland, Estonia, the UK, Lithuania, etc.
2.Forming Legal Entity
For a cryptocurrency company, forming a legal entity in your preferred jurisdictions requires extra attention because of increased scrutiny in the sector.
This important step encompasses structuring your company to comply with all local laws and support your strategic and operational objectives.
3.Taking Care of Documentation Requirements
The ESMA (European Securities & Markets Authority) has very detailed guidelines on which documents businesses require. Some of these include the following:
- Complaint-handling processes
- Program of operations
- AML documentation
- Governance policies
- Client-asset segregation policies
- Business continuity plans
In 2025, getting a permit is important for every cryptocurrency business. As regulations tighten globally, it is important to ensure you get a cryptocurrency permit. This way, you won’t just gain the trust of customers and investors. You will also ensure compliance and gain operational credibility.
