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Cryptocurrency Exchange and Crypto Currency Wallet Operator Authorization

European Markets in Crypto-Assets Regulation MiCA introducing harmonized crypto assets regulatory framework in all European Union and European Economic Area (EU/EEA) currently is under development. More and more European countries introduce their own national Virtual Asset Service Provider authorization (VASP).  A pan-European VASP license currently does not exist. All existing European crypto activity authorizations are national.  Crypto authorization issued by one of the EU member-state may allow the provision of crypto-related services in other EU/EEA countries based on EU fundamental freedom of establishment and freedom to provide services within all EU/EEA area.

Types of Virtual Asset Service Provider authorization

Usually, there are 2 main types of VASP authorization:

  • Crypto currency exchange operator for fiat-crypto, crypto-fiat and crypto-crypto exchange
  • Crypto currency depository wallet operator for virtual asserts custody and management of client’s cryptocurrency depository wallets

Type of authorization may vary depending on the country. There are jurisdictions requiring additional authorization issuing virtual assets (tokens) in primary market (ICO, IEO).

Companies holding VASP authorization in EU/EEA countries are subject of supervision by national Anti-Money Laundering authorities and/or financial regulators.

What you need to consider choosing European jurisdiction for VASP

  • Company incorporation and registered share capital requirements
  • Local presence requirements in the country of registration and employment of local AML officer/MLRO
  • Possibility of of a bank/EMI account opening for the company
  • Client onboarding, KYC, and AML reporting requirements
  • Regulatory reporting and company maintenance costs

For instance, Poland is attractive jurisdiction because of the absence of additional capital requirements for the companies holding VASP authorization. Lithuania is attractive because of big choice of licensed crypto friendly financial institutions offering bank/EMI accounts for crypto companies.

Lithuanian crypto exchange and crypto wallet authorization

Lithuania being a widely recognized traditional finance jurisdiction for payment and electronic money institutions in Europe became one of the most popular jurisdictions in Europe for crypto companies. Having national cryptocurrency exchange and crypto currency depository wallet operator authorization Lithuania is one of few European Union and European Economic Area (EU/EEA) member states offering transparent and cost-effective Virtual Asset Service Provider authorization.

The world’s biggest crypto exchange Binance holds Lithuanian crypto exchange and cryptocurrency depository wallet authorization since the middle of 2020. ECOVIS advised Binance during whole incorporation and authorization process. Lithuanian national virtual assets regulation currently considered as one of most favorable in the European Union allowing provision of crypto assets related services in the single European market. The simplicity of the procedures for obtaining a cryptocurrency license in Lithuania, the speed of its entry, as well as friendly regulator are those things to be interested in the issue of crypto licenses in Lithuania.

Lithuanian AML/KYC requirement for the companies holding cryptocurrency authorization

The legal entities (companies) registered in Lithuania and the affiliates of EU and non-EU companies registered in Lithuania can apply for the Virtual Asset Service Provider authorization.

  • Applicants need to have all necessary AML/KYC polices and implemented procedures required for the provision of virtual assets related activities. Cryptocurrency exchange and crypto currency depository wallet operators are supervised by the Lithuanian Financial Crime Investigation Unit – FIU.
  • Members of the Management Board, as well as Ultimate Beneficial Owners (UBO’s) of the company, must meet the requirements of impeccable reputation. There is no requirement for the directors and members of the board to be Lithuanian/European residents.

Virtual Coin and Exchange Offering ICO/IEO registration

In addition to traditional Crypto Currency Exchange and Crypto Currency Depository Wallet Operator authorizations Virtual Coin and Exchange Offering (ICO/IEO) for token distribution to the investors can be done under Lithuanian virtual assets authorization. Separate AML/KYC and other reporting requirements are established for the companies carrying out ICO/IEO activities. The companies registered in Lithuania are allowed to register and publicly distribute virtual coins by offering them to the investors in EU/EEA.

General requirements for the entities engaged in VASP activities:

  • Customer identification and verification
  • Reporting to the Lithuanian FIU
  • Keeping records and client data
  • Meeting Lithuanian presence requirements and employment of AML officer
  • Implemented AML/KYC polices and internal control procedures

New Lithuanian company incorporation and VASP authorization process (including company incorporation and bank account opening) can be done fast by sending power of attorney and online without the personal presence of the company shareholder(s) and director(s) in Lithuania.

ECOVIS services in the field of cryptocurrency registration and authorization

ECOVIS is a leading global consulting firm having more than 9000 professionals operating in more than 90 countries in all EU and around the world. ECOVIS network allows to serve clients in all major jurisdictions and propose the best licensing solution based on client needs. The particular advantage of ECOVIS is the combination of personal advice at a local level with the general expertise of an international and interdisciplinary network of professionals.

ECOVIS ProventusLaw currently is the most experienced Virtual Asset Service Provider authorization advisor. We authorized more than 25 crypto companies for European business including World’s biggest crypto exchange Binance.

ECOVIS provides a full set of services of VASP authorization including company registration, and preparation of all required AML/KYC policies and procedures. After the authorization process, ECOVIS provides tax advice, bookkeeping, and compliance services for authorized entities. ECOVIS also assists in the opening of bank and electronic money accounts for crypto companies.

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