Obtaining a license is a crucial step towards building a crypto startup that wants to join the international business realm. A legal permit for crypto activities in Europe, also known as a VASP license or a VASP authorization depending on the jurisdiction, has a standardized set of requirements that are similar from country to country. Mainly, they include:
- Incorporation of a Limited Liability Company (LLC) in Europe (often in the licensing jurisdiction);
- Opening of a corporate bank account and depositing the starting share capital;
- Obtaining a legal address in Europe ;
- Appointment of a management board;
- Being compliant with AML/CFT based on the 5th AML Directive of the EU;
- Preparation of a document package depending on the country.
Additional requirements might be established at the discretion of a particular authority, which means that there isn’t a pair of European jurisdictions with identical sets of authorization criteria for VASPs.
How to settle on a crypto license in Europe?
Anyone who wants to secure a crypto license in Europe must distinguish between different types of legal permits across the Union. The most popular licensing jurisdictions in 2024 are Poland, Estonia, the Czech Republic, Lithuania, France, Luxembourg, Austria, and Cyprus.
In order to choose the most suitable license for your business, you must assess the scope of activities covered by each European regulator. Before applying for a license, properly define all the business models involved in your company and the degree of their legality in the country you are aiming at.
Application process for a crypto license in Europe
The process of applying for a crypto license in Europe is similar across most countries of the EU thanks to the shared and straightforward set of rules. In order to prepare and submit an application, every candidate must:
- Forming an LLC with a legal address in the licensing country or the EU;
- Compiling all the required documentation, including the AML/CFT compliance policies;
- Assigning a director and an AML Officer (often must be residents of the licensing country or the EU);
- Opening a corporate bank account and depositing the starting share capital.
Most entrepreneurs, especially those who are opening a crypto company for the first time, resort to the services of legal experts. A professional lawyer becomes responsible for the preparation of all the necessary paperwork and presents it to the regulatory authority. In the end, the company’s CEO can concentrate on running the business, whilst the legal professional monitors the licensing process.
VASP license in Europe: price and length
The licensing timeframe in Europe for crypto companies can take from two weeks to a couple of months, depending on the complexity of the project and the workload of the regulator. In addition, the procedure may take longer if the candidate applies for a license remotely, that is, without visiting the licensing country personally.
As for the price of a crypto license in Europe, it is a combination of many factors, such as the jurisdiction itself, business models that comprise the company, its target markets, and even financial forecasts. One of the most cost-effective crypto permits in the EU is the VASP license in Poland. This jurisdiction combines a swift licensing process in just about 3 months, some of the lowest setup and maintenance costs, and low tax rates.
VASP status in Europe: ongoing compliance
Even though a crypto company commences its operations legally as soon as it obtains a license, ongoing compliance obligations are as important as those listed for the licensing applications. The most common post-licensing obligations include:
- Respecting the AML-CFT laws and complying with them at all times;
- Reporting on the clients’ and financial data;
- Regular technical assessment and audit;
- For crypto-asset issuers: complete data of holdership and transactions.
It is also crucial to note that requirements such as the solvability of the company must be reevaluated yearly (commonly known as prudential requirements). An expert lawyer can assist a crypto company with filing monthly, quarterly, or annual reports to the regulatory authority, as well as staying compliant with the AML-CFT directives of the European Union.
Benefits of obtaining a crypto license in Europe
A crypto license in Europe gives prospects of growth for a crypto business on an international scale. The advantages of a European crypto license in 2024 also stem from the enforcement of the MiCA regulation, which has streamlined the licensing algorithm and made it similar across all Member States. Now that the EU countries are starting to implement MiCA, it is the best time to obtain a license and strengthen the position of your crypto company on the European market. By doing so, you will reap such benefits as:
- Legal clarity: under MiCA’s unified framework, all businesses will operate under clear rules, reducing legal uncertainty and avoiding the risk of accidental noncompliance;
- Increased trust and credibility: a licensed crypto business is seen as more trustworthy and credible in the eyes of customers, investors, and partners. European regulators are known for their rigorous standards, so obtaining a license from an EU authority can improve a company’s reputation globally;
- Guaranteed banking gateways: many traditional financial institutions are reluctant to work with unregulated crypto firms. Having a crypto license makes it easier to form banking relationships, enabling companies to access essential financial services such as corporate banking, payment processing, and even fiat-to-crypto transactions;
- Transparency and market integrity: MiCA and other European regulations emphasize consumer protection, which creates a safer ecosystem for users and leads to increased trust from the clientele;
- Competitive edge: obtaining a license in the EU provides businesses with a competitive advantage compared to companies registered outside the Union or in less trustworthy jurisdictions.
Obtaining a crypto license in Europe in 2024 is the best thing you can do to ensure the transparency, integrity, trustworthiness, and growing prospects of your business. Due to the precise licensing requirements and brilliant reputation, it is now more prestigious than ever before to register a VASP in Europe.