The cryptocurrency industry offers great opportunities for investors. As digital currency continues to gain popularity, the need for cryptocurrency regulation has emerged. Controlling this activity is now one of the priorities of countries around the world. Compared to the initial period of development of this industry, many countries used to adjust their legislation to counteract the main threats associated with cryptocurrencies.
It is important to comply with the current legislation in order to conduct commercial transactions with crypto assets. In most cases, it is necessary to obtain a crypto license. This will help to legally manage cryptocurrency exchanges and custodial wallets. Nowadays, crypto licensing is very important and provides many advantages, although it is a rather complicated procedure with many nuances.
What Are the Regulations Surrounding Cryptocurrency?
For example, in the United States, those entrepreneurs who want to start trading cryptocurrencies must obtain a crypto license from the Financial Crimes Enforcement Network (FinCEN). This is a necessary procedure before you start operating a crypto exchange or trading platform. In turn, other countries around the world have different requirements of regulatory authorities for this activity.
What Is the Necessity for Obtaining a Cryptocurrency License?
All trading platforms and cryptocurrency exchanges are part of the money transfer industry and are therefore subject to a significant level of regulation. Of course, there is a considerable risk of fraud when transferring from one party to another. For many criminal elements, cryptocurrencies have become a real boon because of the encryption of transaction data. Licensing cryptocurrency exchanges helps to ensure that blockchain technology is not used for illegal activities. This can be the prevention of money laundering, for example.
Anyone who wants to get a license must:
· Implement anti-money laundering and KYC (Know Your Customer) procedures. The banking sector has something similar.
· It is necessary to collect and confirm information about customers.
· Closely monitor customer money transfers.
· Be sure to report any suspicious activity to the regulatory authorities.
We can draw a small conclusion that cryptocurrency regulation is needed to prove that businesses operate transparently and in accordance with the law.
Types of Crypto Licenses
If your business is related to the exchange of cryptocurrencies, FinCEN requires that the company be registered with the US Department of the Treasury. It is necessary to indicate that the company carries out money transfers – a special type of money services business (MSB). There is no difference between real currencies and convertible virtual currencies.
When your cryptocurrency company is registered at the federal level in the United States, you will most likely also need to obtain a license at the level of the state in which you are based. If your business has a presence in multiple states where it is defined as a money transmitter, you will need to obtain a license in each of these states.
Always keep up to date with the latest information on state laws, as they are subject to change. Make sure to get legal advice
Requirements for Bonding in Money Transmitter License
Every business owner must pay all reasonable claims for damages, as this is legally required by license bonds. Typically, the price of these bonds ranges from 1.5% to 3% per annum of the amount of the bond itself. This usually depends on the financial capacity and credit risk of the principal.
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