How to get an MSB license in the USA
The service for opening a crypto exchange in the United States is quite in demand. The requirements imposed by the financial authority of the jurisdiction are quite complex and the procedure for obtaining a license without proper legal support is complicated.
Money service business or money operator?
So, the concept of "money operator" or money services business (MSB) applies to persons engaged in business in the field of exchanging virtual currency for fiat, fiat for virtual currency and cryptocurrency for cryptocurrency.
Note that if the company plans to act as an intermediary in the process of exchanging virtual currency for ordinary money, a special license called "Money transmitter license" is provided. But for those platforms that will exchange crypto-crypto, you need to issue a standard MSB license. Please note that this kind of business in the United States is regulated both at the federal level and at the level of individual states, so the procedure for opening a crypto exchange may differ. If the company plans to operate in several states, then the license must be issued in each of them.
Requirements for crypto exchange companies
There are many requirements for companies obtaining a financial license. To get started, you should register with the US Treasury Department (this registration will need to be renewed once every two years). Then the company is registered with FinCEN as a money service business (MSB)[1] . The MSB Registration Form (FinCEN Form 107), must be completed and signed by the owner or controlling person and filed within 180 days of the date of company formation. By registering, you can check all information about the company on the FinCEN website[2] .
An MSB is only required to submit one registration form, regardless of how the MSB business is structured - it operates as a sole proprietor, as a partnership, as a corporation or any other structure. Regardless of the number of branches in which MSB offers crypto exchange services, only one form is filled out (but the number of branches must be indicated in the application). After receiving the license, the crypto exchange company has the following responsibilities:
- Providing lists of clients and contractors of the company;
- Reporting Suspicious Transactions
- Compliance with anti-money laundering and anti-terrorist financing policies;
- Providing reports on transactions> 10.000 USD;
- Storing information about money transfers;
- Keeping a record of the exchange of cryptocurrencies.
Compliance program
All MSBs are required to develop and implement an AML / CTF program. This program is designed to discourage the use of MSBs to facilitate money laundering or terrorist financing. Each document is drawn up jointly with lawyers, since the programs must be drawn up in accordance with the current legislation in this area. It is also necessary to appoint a person who will ensure compliance with the provisions of the BSA - The Bank Secrecy Act.[3] in the course of the company's activities.
The website of the crypto exchanger should also contain the Personal Data Processing Policy and Privacy Policy, Cookie Policy, Refund Policy and KYC Policy.
What information does a company have to provide in order to obtain a licence?
As we have already specified, if a company is a liaison in crypto-fiat exchange transactions, it must receive a Money Transmitter License.
A company planning to act as an intermediary in crypto - crypto exchange transactions receives an MSB license in accordance with the laws of the state where this legal entity is registered.
Despite the fact that each state has its own regulatory legal acts, the rules for licensing the cryptocurrency business are quite similar. Usually, entrepreneurs wishing to exchange cryptocurrencies are required to provide:
- the name of the company and its legal address;
- the name of the trademark under which the crypto exchange (DBA) will operate;
- a list of offenses that the applicant has committed recently;
- information on whether the applicant is a party to the trial;
- a list of those services that the applicant provided before the application was submitted and the services that he intends to provide after receiving the license;
- a list of locations where licensed services will be provided;
- list of employees hired to work with clients;
- a list of states where it is also planned to engage in financial activities;
- information about the current bankruptcy processes in which the applicant appears;
- a sample of a contract with a client.
Thus, in the USA there are a lot of requirements for a potential provider of virtual currency exchange services, which can be dealt with using the experience and knowledge of professional consultants and lawyers of A4 Law Firm.
[1] URL: https://www.fincen.gov/sites/default/files/shared/FinCENfactsheet.pdf.
[2] URL; https://www.fincen.gov/msb-state-selector.
[3] URL: https://www.fincen.gov/bsa-requirements-msbs.
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