The main reasons why you may be denied a permit
When starting a new business, you need to be sure that you can do it legally. In the crypto world, a business cannot operate without a crypto license. To obtain a permit, you need to meet certain requirements, and they differ from country to country. Today, we want to look at several reasons why you may be refused; perhaps this information will be useful to you.
Only if a company has a crypto license will it be legally allowed to engage in such business. Suppose the company does not have this document. In that case, only some people will want to cooperate with it since the majority prefer to have exclusively reliable partners whom the relevant authorities have fully vetted. The financial risks are significant enough to deal with an unlicensed company in this area.
Having passed the necessary checks and received permission to operate cryptocurrencies, the company will automatically become guaranteed reliable in its partners’ eyes, contributing to cooperation and firm development. The main requirements are AML and KYC.
In what cases is permitting required?
We list the types of crypto activities for which getting a business permit will be a prerequisite:
- purchase and sale of e-money;
- implementation of exchange: electronic coins of one type are exchanged for another or fiat for electronic currencies (and vice versa);
- a broker company acts as an intermediary between other organizations;
- management of crypto assets of other companies – provision of electronic storage, investment, carrying out crypto transactions;
- the organization issues digital coins that have a specific price;
- salaries in the company are paid in electronic coins.
Therefore, before registering a crypto firm, it is essential to choose the direction of activity, which will be specified in the permit papers for the legal conduct of business with digital assets. It is worth noting that each state provides specific crypto licenses, for example, for one type of financial activity or several.
In addition, if you prefer fewer problems with obtaining a permit, you should pay attention to jurisdictions where minimum requirements are imposed on cryptocurrency business: Portugal, Czech Republic, Latvia, Estonia, Singapore, Georgia, and Slovakia. When choosing a jurisdiction, determining the permitting conditions in advance is recommended. Only some established companies can fulfill all the needs of countries such as Switzerland, the USA, and many others. Therefore, so that your company is not denied permission to deal with electronic coins (due to failure to meet inflated conditions), it is essential to pay attention to this aspect.
Reasons why licensing may be denied
Obtaining permission can take, on average, 1-4 months. It all depends on the chosen jurisdiction. Having decided on the state, you must register it and open an account in a local bank. Next, several conditions begin to be fulfilled, and if at least one does not meet the requirements, permission to conduct activities related to digital assets will not be obtained. Let’s consider these requirements.
Start-up capital and financial support
Each jurisdiction imposes conditions on the amount of starting capital and documentary evidence of their legal origin. The amount may sometimes be vague, but it should be enough for the company to function fully within 6 months; the developed business plan confirms this. Such 6-month activities should be described in detail, indicating specific amounts: necessary expenses and planned profit.
Selecting personnel with a clean reputation (no criminal record or debt) is necessary. Specialists must have appropriate qualifications and experience in this field. One of the main conditions is appointing officers responsible for compliance with AML and KYC policies. Activities related to this aspect should be provided in separate sections. Most states require that at least one of the leaders be a citizen of that state.
Availability of office
Most jurisdictions require a physical office registered in their territory. Either it is purchased or rented. The office must be technically equipped with appropriate equipment and software requirements. Regulators often inspect the office and its functionality. These are the most standard permitting requirements. The organization can issue a crypto permit if one of the conditions is met.