How to Get a Crypto License in Europe

2023 06 26

In the past, businesses in the crypto sector across the EU countries had to comply with several regulatory frameworks that varied from one country to another. For example, Lithuania's crypto license is different from the requirements for a crypto license in Estonia, which is equally different from the crypto license in Ireland and other parts of Europe.

However, recent changes in the cryptocurrency regulatory framework across Europe would end that. On the 20th of April, the EU adopted a new framework called MICA, which would provide more harmonized crypto regulations among member states.

This guide provides a quick but in-depth overview of cryptographic regulations in Europe. We also provide a step-by-step guide on how to get a crypto license in Europe. Not only that, but we also highlight how companies can get crypto licenses in most of the EU countries, including Estonia and Lithuania. These two countries are arguably some of the most receptive to cryptocurrency.

Who Needs an EU Cryptocurrency License?

Before jumping into the details of how to obtain cryptocurrency licenses in Europe, let’s quickly have a glance at the nature of crypto businesses that are mandated to obtain a license to operate in the EU.

Note that if your business or intended company falls under any of the categories below, you’ll need a license to legally operate in any EU country.

• Online cryptocurrency exchanges or trading platforms for crypto-assets
• Converting crypto assets or tokens to funds
• Converting crypto assets or tokens to other forms of crypto or digital assets
• Platforms that provide exchange facilities from virtual currencies to fiat currencies
• Managing crypto assets on behalf of a third party
• Transferring crypto assets or executing crypto asset orders on behalf of third parties
• Crypto advising and consulting services
• Holding and storage or management of digital currencies and crypto assets on behalf of others or third parties

Generally, under the MICA framework, businesses that operate in the cryptocurrency sector are called crypto asset service providers (CASP).

What is MICA?

On April 20, the EU Parliament adopted the Markets in Crypto Act (MICA). The act would serve as a harmonized regulatory framework for businesses in the crypto sector across the EU. It aims to regulate and provide a stricter operating environment for Crypto Asset Service Providers (CASP) in the member country.

Prior to the introduction of MICA, most member states operated their regulatory frameworks that differed widely from one another. Therefore, companies entering the EU markets had to comply with different regulations. With the introduction of MICA, there’s an easier path ahead for companies eyeing the EU crypto market.

Meanwhile, member states may not ratify the framework at this time as the process requires some compliance from existing companies.

Crypto asset service providers (CASP) may have to wait a few months before enjoying the full effect of CASP. Under the new framework, CASPs, crypto traders, token issuers, and other players in the crypto sector are required to maintain full transparency and keep an open book about their businesses and operations.

How to Receive a Cryptocurrency License Under MICA

Crypto companies looking to operate in the EU through the MICA regulation would need to receive adequate authorization and a cryptocurrency license. The first step is to register an office in any member state and take on a resident as one of the company directors.

Also, the company must provide detailed information about its operations, structure, and governance and ensure it complies with the MICA regulations. When working towards complying with the MiCA regulations, companies and founders need to note that the MICA regulations are specified according to the services provided by each company.

Therefore, get an expert or a lawyer to guide you through the process. Generally, the crypto license requirements set out in the MICA regulation are almost identical to the ones used by individual states.

Why Should You Obtain a Crypto License in Europe?

• Validates your business: Besides being a requirement for building a successful cryptocurrency business in Europe, obtaining a license also gives your customers and investors the confidence they need to do business with you.

• Government and economic partnership: Most governments would prefer to partner with and do business with companies that fulfill their regulatory frameworks. It’s almost impossible to secure an opportunity with the government of a country when your business operates illegally.

• Compliance: Running a compliant business within the borders of a country establishes you as a patriotic and progressive business. Countries around the world don’t welcome businesses that undermine regulatory efforts.

• Economic and industry relevance: Without an appropriate license, your business would not be recognized within your industry or the economy of the country you operate in.

• Banking and finance opportunities: Accessing loans and securing banking relationships for your cryptocurrency business may be difficult if you’re not properly registered in EU countries. Bans would only do business with companies operating legally.

Who regulates crypto in Europe?

Cryptocurrency in Europe is regulated by the European Securities and Markets Authority (ESMA). It has the authority to ban, penalize, or restrict the operation of cryptocurrency asset providers in Europe.

However, the MICA enforcement process across EU member states is still being reviewed.

Which country is easy to get a crypto license in?

In Europe, Estonia has the most cryo-friendly regulations. Obtaining a crypto license in Ireland is also quite easy, and a crypto license in Poland also follows suit.

Other countries including Lithuania, the Czech Republic, and Estonia have issued over 4,000 cryptocurrency licenses. Recently pressure from the EU community forced a change to its cryptocurrency regulation.

Globally, Singapore still holds the reputation of being the most accommodating country when it comes to cryptocurrency licensing.

How to Get a Cryptocurrency License in Europe

Pending the full implementation of MICA, CASPs may have to leverage the existing frameworks of member countries to establish business operations in Europe.

The process of getting a crypto license varies from one country to another. However, the fundamentals may remain the same.

First, you need to establish a business presence in the country and perhaps enlist a resident of the country on your board of directors. Then you may need to adhere to certain regulations and perform appropriate registrations. Then you may apply for a license.

Currently, Estonia, Lithuania, Poland, Ireland, the Czech Republic, and some other countries are some of the most accommodating places for businesses in the crypto sector. Below is a quick guide to what you should know to operate in some of these countries.

How to Get a Cryptocurrency License in Estonia

Estonia is a crypto-friendly jurisdiction in Europe. At one point, it was said to have issued over 4,000 crypto currency licenses. Interestingly, crypto asset service providers can obtain a crypto license in Estonia in less than 7 steps and can do so online.

A quick overview of the steps involved in the process is provided below.

Estonia's Crypto License Requirements

• Have a company presence in Estonia. However, you may need to employ the services of an attorney to achieve this.

• Set up a business account. Also, you may be required to fund the account with a certain amount of money.

You may be required to set up a physical office in Estonia.

• Employ the Estonia representative of the KYC/AML officer. The officer would have to become a member of your team.

• Come up with a procedural rule, KYC/AML document, etc. It’s essential to allow a qualified attorney to do this for you.

• Apply for a crypto license. The last step of the process is to apply for the license. You’ll likely receive your license if you have the necessary documents and follow the process diligently. Applicant may have to pay a certain price in share capital

How to Get a Cryptocurrency License in Lithuania

Besides Estonia, Lithuania is also an EU country with crypto-friendly regulations. Companies wanting to start a cryptocurrency business in Lithuania may have to adhere to some statutes before operating in the country.

Below are some of the most essential requirements:

Lithuania's Crypto License Requirements

• Legal documents of the company’s shareholders and directors

• Background information on principals

• Specifics about invested capital and sources

• Business presence in the EU

• Business plan

• Information about operations, risk, and compliance software

• Other documents (copies of the founders' passports, police clearances, utility bills for address verifications, etc.)

• The required share capital of 125 000 euros

• Other requirements require the help of a legal expert to interpret.

How Much Is a Crypto License in Lithuania?

Following the legislative adjustment of 2022, the price of a crypto license in Lithuania has moved up to 125 000 euros. Companies applying for licenses in the country would be asked to deposit these amounts in share capital.

Conclusion

Europe still leads the world in cryptocurrency regulations. With the new MICA regulation, it has even secured its place as the top continent in the crypto market. However, recent developments have made securing cryptographic licenses quite complex.

This article highlights how to acquire a crypto license in major European countries. It also touched on the process involved in obtaining a license under the MICA regulation. Finally, we’ve made recommendations on how to enlist the services of qualified legal practitioners in the process.

How to Get a Crypto License in Europe