Where to register a cryptocurrency exchange in 2021 and 2022: an overview by country.

Contents:

• Why Croatia or Lithuania?
• Stages of opening a Cryptoexchange in Lithuania and Croatia
• Registration of a company and obtaining a cryptocurrency license in Lithuania
• Registration of a company and obtaining a cryptocurrency license in Croatia

The digital economy built on distributed ledger technology is one of the fastest growing industries in the modern market. Just 10 years ago, the first cryptocurrency Bitcoin (BTC) was priced at $ 1, and now the price tag has reached $ 64,000 and continues to show expansive development. This is a lightning-fast developing industry, and you can still become a part of it if you decide to open your own cryptocurrency exchange. According to statistics, the most profitable companies in the digital industry are crypto exchanges. That is why below we will tell you how to establish such a business in the most optimal jurisdictions - Croatia and Lithuania.  

Why Croatia or Lithuania? 

The peculiarity of virtual currency lies in its rather complex legal status. Many world powers are still pondering whether cryptocurrencies can be legal tender and how to tax and control them. But some countries have advanced much further in the legal regulation of the digital financial asset market. Among them are Croatia and Lithuania.

These European states are loyal to the progress in the field of financial technologies, therefore, they are building a friendly policy regarding digital finance. The National Bank of Croatia adheres to the following idea: cryptocurrency assets should not be classified as financial assets, but the circulation of these assets in the country is not considered illegal, the exchange of cryptocurrencies is not prohibited. That is, the state does not yet consider the use of digital means of payment as a third national currency, but the dynamic development of the industry is obvious. The local income tax bypasses digital funds, it will turn out to be easy to earn both on mining and on the exchange of digital units. However, for cryptocurrency transactions paired with fiat (classic money), 12% tax must be paid.

The situation in Lithuania is similar. The Central Bank today recognizes that the restriction of these means of payment is an infringement of a huge part of investors among initiative citizens. Therefore, coins that have passed the official listing can be safely used on the territory of the state, in particular, they can be exchanged.

Until recently, Estonia was the most popular jurisdiction for opening a cryptocurrency exchange, however, constant changes in legislation, license revocations do not allow Estonia to be considered a reliable option in the long term.

Stages of opening a Cryptoexchange in Lithuania and Croatia

The Croatian and Lithuanian legislation regarding virtual assets is quite similar, so the material below can be considered a universal guide. Below is a universal list of actions required to get started on the territory of both countries:

• Registration of a legal entity;
• Registration of a legal address within the state;
• Authorization in local financial services management. 

Obtaining a license means checking your activities and business structure, the literacy of the preparation of documentation, in particular a business plan.

Having gone through the procedure for registering a company for obtaining a license, you will open access to the European market, since both Lithuania and Croatia are member states of the European Union.

Registration of a company and obtaining a cryptocurrency license in Lithuania

Back in 1997, the Ministry of Justice of Lithuania founded and delegated the responsibility for the registration of legal entities to the Center of Registers, which is a public entity with limited civil liability.

You should start with the registration of a local legal entity, after which a package of documents is collected, which is further sent to the authorized services. The legality of the upcoming work with virtual currency, the ability to interact with counterparties is checked. Living in Lithuania or Europe is not a compulsory factor.

The company is obliged to verify especially large payments, store user information and, if requested, transmit specific information to the FIS (Financial Crime Investigation Service), to which the exchanges regularly report.

Cryptocurrency startups are encouraged to choose the legal form of UAB (LLC). The minimum authorized capital of a company is 2500 EUR. Requires at least 1 director (individual) and 1 shareholder. Also, a company working with a cryptocurrency is required to appoint an AML officer who will monitor compliance with the legislation in the field of combating money laundering and terrorist financing. A Money Laundering Reporting Officer (MLRO) must be appointed and the relevant information must be submitted to the Lithuanian FIU within 7 working days after the appointment. There are no specific requirements for an MLRO, but such a person is a key contact with government and law enforcement agencies. Therefore, it is strongly recommended to take into account the officer's ability to communicate in Lithuanian and have an appropriate education.

So, in order to apply for authorization from the regulator, it is necessary to register a separate Lithuanian legal entity and prepare the necessary documents necessary to carry out activities related to virtual currency, to implement AML / CTF control measures. Members of the Board, as well as the Ultimate Beneficial Owners (UBO) of the company, must meet the requirements of an impeccable reputation - they cannot be convicted of violations related to private property, economic and business order, the financial system, government service or the public interest.

There is no requirement to reside in Lithuania for the CEO and members of the executive board. They should only meet the requirements of an impeccable reputation and have relevant work experience.

The registration period is 2-3 months in general: registration of a company and obtaining a license.

Registration of a company and obtaining a cryptocurrency license in Croatia

On the territory of Croatia, there are two regulatory legal acts that govern the activities of crypto-exchanges: the Act on the Regulation of the Activities of Payment Systems and the Law on the Regulation of the Capital Market. In Croatia, you must also go through the procedure for registering a legal entity.

Although Croatia does not directly regulate digital financial assets, it does regulate it through its anti-money laundering regulations. Specifically, the Cro-AMLA rules cover two types of cryptocurrency businesses: “virtual currency and fiat currency exchange service providers” and “wallet providers”.

Wallet providers are defined as “a legal entity or individual that provides services to protect private cryptographic keys on behalf of their customers for the storage, storage and transmission of virtual currencies.” In other words, cryptocurrency wallets are internet sites or mobile phone apps that allow users to store their virtual currency tokens. One notable example is Coinbase. Due to the rules imposed by AML legislation, crypto investors in Croatia remain legally protected.

After registration of the company, authorization by the regulator - Croatian financial Services Supervisory Agency (CFSSA) is required. It provides companies with the ability to operate with cryptocurrency as an electronic wallet or crypto exchange.

To register with the regulator, you must provide a certificate of registration of the company, a passport and confirmation of the place of residence of the director and beneficiary of the company, a detailed business plan and unconditionally confirmation of the contribution of the authorized capital in the amount of at least 2,700 euros. The registration period is 2-3 months in general: registration of a company and obtaining a license.

Even at the start, the future entrepreneur must understand that he is going to be engaged in serious business. The latter is impossible without a close-knit team of lawyers and economists.

Our team of A4 Law Firm lawyers will provide high-quality legal assistance in launching your project - a cryptocurrency exchange on the territory of both Croatia and Lithuania. You can contact us by phone number +7 499 841 0505 or by e-mail info@a4lawfirm.ru.