Crypto Currency Licence in UK
If you are looking for the easiest possible entry point in Europe for your crypto businesses you should consider the United Kingdom!
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While the impact of the decision to leave the EU (Brexit) on foreign investment is still subject to uncertainty, the UK Government has repeatedly emphasised that the UK will remain very much open for business, and London will continue to be a leading destination for international tech investors, with the country still set to score highly in terms of its flexible trading environment, competitive tax rates and strong legal framework.
WHAT IS A CRYPTOCURRENCY LICENCE IN THE UK?
Literally, there is no such a term as ‘cryptocurrency licence’ in the UK. However, from 10 January 2020, firms carrying out specific cryptoasset activities in the UK need to comply with the amended Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) and register with the Financial Conduct Authority (FCA). This very FCA registration is also known as ‘crypto licence’ ‘cryptocurrency licence’ or ‘crypto exchange licence’.
WHO NEEDS TO REGISTER?
The following cryptoasset activities set out in Regulation 14A of the MLRs are subject to FCA Crypto Registration to comply with AML/CTF regime.
- The exchange of fiat currency for cryptoassets
Exchanging fiat currency (government-issued currency) for a cryptoasset or vice versa.
- Providing custodian wallets for storing cryptoassets on behalf of customers.
A business that looks after the customer’s tokens in its IT system or server and may administer or transfer the token on behalf of the customer.
- The exchange of one cryptoassets for another
Exchanging one cryptoasset for another cryptoasset.
- Operating cryptoasset ATMs
Physical kiosks that allow users to exchange cryptoassets and fiat currencies.
- Facilitating the peer-to-peer exchange of cryptoassets
A business that provides an online marketplace which facilitates the exchange of fiat currencies and cryptoassets (both fiat-to-crypto and crypto-to-crypto) between prospective buyers and sellers.
- Participation in Initial Coin Offerings (ICO)
A business that sells a cryptoasset, promoted or sold as a new type of cryptoasset or one that will become usable in the future, in exchange for fiat currency.
Activities relating to rights to and interests (eg beneficial interests) in cryptoassets are in scope of Regulation 14A, unless you only provide custodian services.
The activities specified are subject to FCA registration if they are carried on by way of business in the UK. If you have no UK office or other activity in the UK, beyond having a client in the UK, the FCA are likely to consider that you are not carrying on UK business. However, it is strongly advised to seek a professional opinion on this matter since the FCA may ask you to explain why you think your activities are not in scope.
CAN WE CONSIDER A CRYPTOCURRENCY AS ELECTRONIC MONEY?
Not really. Even if both being in digital format, there are no other similarities between cryptocurrency and e-money. While e-money is a mechanism for interacting with government-issued and regulated currencies such as dollars and euros, cryptocurrency is a virtual currency that has no fiat currency counterpart. Cryptocurrency is based on a decentralized peer-to-peer network that can be transferred somewhat anonymously and can be highly volatile in terms of value. These characteristics of cryptocurrency, while having some potential benefits, can pose considerable risks to consumers and make it a challenge for regulators.
DO YOU NEED TO REGISTER IF YOU ALREADY HAVE A UK PI/EMI LICENCE?
Yes, because the PIs and EMIs have different regulatory framework, so if you wish to add crypto activity to your scope of business, you have to apply for FCA Crypto Registration.
CAN YOU APPLY FOR A FCA CRYPTO REGISTRATION?
To become fully registered, cryptoasset businesses regulated by the FCA under the MLRs and any person who is an officer, manager and beneficial owner in the business, will be subject to the fit and proper requirements under Regulation 58A of the MLRs.
Any officer, manager and beneficial owner must pass the fit and proper test before the business can be fully registered, or remain registered, with the FCA.
WHAT YOU WILL NEED TO APPLY?
You will need to provide the information about your business model such as: programme of operations, business plan, marketing plan, structural organisation, systems and controls, individuals, beneficial owners and close links, governance arrangements and internal control mechanisms, AML/CTF framework and risk assessment, business-wide risk assessment, all cryptoasset public keys/wallet addresses.
WHAT WILL BE THE FCA APPLICATION FEE?
- £2,000 – for business with UK cryptoasset revenue up to £250,000
- £10,000 – for businesses with UK cryptoasset revenue over £250,000
Note: After the registration you will be liable to pay periodic fee based on your annual revenue. You will remain liable until the FCA cancels its registration.
Average Professional Fees:
Usually, the full package to acquire your licence includes:
- Formation of Company;
- First year company registered address;
- One set of original corporate documents and rubber seal;
- Due Diligence file for Directors and Shareholders of the company;
- Completing a FCA Application;
- Collecting supporting license application documents from the client;
- Submitting the application to the FCA and following it up until finalised;
- Bookkeeping and Accounting
Our professional fees start from $20.000.
Extra Services you may consider to evaluate:
- Crypto Software;
- Compliance Officer;
- Assistance in finding FCA fit and proper office space and directors/managers;
If you already know the business structure you will need and the best jurisdiction for you, fill in the following form and one of our Team Members will get you a bespoke quote.
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