Virtual currency license in the EU
Along with the network of expert advisors within European Union in the legal and business consulting field, Gofaizen & Sherle. provides advisory service to entities in the virtual assets and blockchain areas and assists with the acquisition of the operating license in the EEA countries where these activities are protected.
The development of the digital assets and virtual values market has attracted the interest of regulatory authorities in the European Union and EEA. Thus, a legal framework has been formed in many EU states that allow the growth of digital assets oriented projects.
Our Practice areas include
- Exchange of virtual values
- Online platform management
- Exchange between virtual values and fiat pairs
- Virtual values custody services
- Remittance of virtual values
- Escrow
- Staking
- Loans in virtual values backed with fiat currency
- NFT digital art auction
- Investment advises (trade signals)
- Mediation in the financial deals related to digital assets
- Capital management up to 500 million EUR
- Attract non-professional (retail) investors
- Manage a portfolio of virtual values
- Full data anonymity of fund investors
- Project research
- Token solution consulting
- Recommendations on the choice of jurisdiction
- Roadmap development
- Legal supporting documents preparation
- Internal research audit of the client’s project
- Examination of applicable legislation with respect to the project
- The legal conclusion/legal analysis of the case
Business climate
In accordance with the 5th Anti-Money Laundering Directive (5AMLD) of the EU, regulation of the virtual assets sector has been introduced. It is the first law that covers the entire EU territory and deals with the regulation of digital values. In this regard, virtual currency is identified as a digital representation of value that is not guaranteed by the central bank or any governmental agency and also does not have a legal status of currency and can be stored and transmitted electronically.
The definition of "virtual asset service provider" covers the following list of activities:
- Exchange of virtual values against fiat/traditional currency (EUR,USD,GBP etc.) and vice versa
- Storage of virtual values on behalf of third parties
- Execution of orders on behalf of third parties
- Reception and transmission of orders
Regulation to digital assets in the European Union is still at an early stage. The EU is working on common principles for virtual currency regulation for all member states while individual member states are already taking different approaches that are based on the 5th Anti-Money Laundering Directive of the EU.
5AMLD establishes that service providers of virtual values must operate in accordance with the rules of combating money laundering what leads to mandatory registration with AML authorized bodies and carrying out a thorough customer due diligence (identify users, track transactions and report suspicious activity to authorities). Regulatory authorities of different EU member states develop their control practices in accordance with local legal traditions and the economy of the state. Germany, along with Spain, Italy, the Netherlands and France are applying tight regulation of virtual values. In these countries, virtual asset service providers are subject to banking act (securities trading) or payment services supervisory laws leading to higher regulatory requirements, as shown in the comparison table below.
Among the EU countries, the most favorable environment is observed in Estonia where is a clear legal definition of virtual currency status as an alternative means of payment. The activities of companies providing services in this area are regulated by the Law and are under the supervision of the Financial Intelligence Unit, which also deals with applications for the issuance of the relevant financial authorizations.
Comparative table of most EEA virtual currency friendly jurisdictions, 2021
- Time required
- Share capital requirements
- License application service cost + govermental fee
- Company registration cost
- Tax on retained earnings (Corporate tax)
- Physical presence of local director
We are working directly with the following regulators
Explore other financial licenses in Europe
- Allows operate with 500 MEUR capital
- Ability to attract deposits from retail investors
- 2-3 month to set up the infrastructure and acquire a license with low costs
- Electronic money emission
- Payment system management
- Money remittance
- Provision of loans (using equity capital only)
- Investment consulting
- Issuance of loans (B2B)
- Wholesale of precious metals
- Foreign currency exchange
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