Why is the choice of jurisdiction for obtaining a license critical? Simple tips for choosing the correct country. What should you pay attention to first?
Simple tips for choosing a jurisdiction to obtain a crypto license
An effective way to invest money is cryptocurrency, which allows you to expand your business significantly. Therefore, most merchants open crypto exchanges around the world. But to launch such financial activities, it is essential to correctly determine the jurisdiction that will best meet your requirements and obtain a crypto license. It will allow you to work legally and increase the number of clients.
Choosing a jurisdiction to obtain a crypto license is an essential point of business starting
Many states provide the opportunity to obtain a cryptocurrency license. But at the same time, each jurisdiction sets local requirements that comply with local legislation. Therefore, before choosing a state for cryptocurrency activities, it is essential to carefully study the regional legislative framework because the rules and requirements are the fundamental factors for the company’s successful start and further development. Not every startup cryptocurrency company will quickly meet the requirements for registration and follow all the rules during its activities.
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Tips for choosing a jurisdiction
Before choosing one of the states, it is recommended to compare several jurisdictions according to the main criteria, which will significantly influence a successful start and all subsequent activities with digital assets.
Period of registration of a company and obtaining a license
First, you will need to register your company. Each jurisdiction has its requirements; for example, in many countries, it is mandatory to have a physical office outside the territory of that state. And this entails additional financial costs. Registration periods vary significantly depending on the choice of jurisdiction and can range from 5 days to 1.5 months. If you want to reduce the time it takes to start a business, then in parallel with registration, you should deal with opening a bank account, which can take up to 2 months.
Business Startup Costs
Registration of a company and the licensing process will require financial costs, which in some countries can be pretty significant:
- for business registration: 800 – 4500 euros;
- opening a bank account: 500 – 3000 euros;
- authorized capital: 11,000 – 100,000 euros, maybe more, or there may be no requirements for it at all;
- obtaining a license can cost 30 – 35 thousand euros.
Since prices in different countries can differ significantly, it is better to find out about this in advance to avoid finding a problematic financial situation.
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Local requirements
Each state has requirements for registering a company and obtaining a cryptocurrency license. Here are some rules that you may encounter in most jurisdictions:
- presence of a physical office on the territory of the state;
- company managers and key specialists are required to provide a higher education diploma in the field of finance and economics;
- provide certificates of no criminal record for company employees;
- establish an anti-money laundering (AML) policy and strictly follow it in the course of business;
- implement a KYC (know your customer) program and use reliable identification of customers and partners;
- availability of appropriate technical equipment for cryptocurrency activities.
It is essential to know all the requirements in advance since compliance with at least one point may result in a refusal to register a company or obtain a license.
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Tax policy
Taxation plays a vital role because the size of the company’s profit will depend on it. Tax policy in each jurisdiction is different and can vary from 5% to 32%. The following criteria will influence the amount of taxes:
- type of company;
- types of financial activities;
- amount of income;
- place of registration in the FIZ (free industrial zone) within a given state.
Some jurisdictions provide preferential taxation (or lack thereof), which helps attract investors to register a cryptocurrency business. It is essential to understand that heavy taxation will take a significant profit, especially for small companies that still need sufficient financial turnover.
Legal framework and rules for regulating financial activities
Each country has a regulatory body that will monitor the company’s cryptocurrency activities and conduct systematic checks for compliance with established requirements. In each jurisdiction, the activities of the regulator may differ significantly. If the conditions are pretty loyal in one country, you may encounter strict rules of the regulator and legal framework in another.
Conclusion
The choice of jurisdiction must be approached thoroughly, and all the advantages and disadvantages of the states in question for registering cryptocurrency activities must be considered. The right choice will be the key to a successful start and further development. Evaluating several countries simultaneously and comparing all the main points of obtaining a license is recommended.
