Cryptocurrency is slowly but surely entering our lives. Ukraine is no exception, as Ukrainians are increasingly interested in cryptocurrency. At the same time, a logical question arises: how and where can exchange it to traditional fiat money (or vice versa)?
Special sites make it easy to exchange crypto. Such online resources are called crypto exchangers. But there are also «physical» offices of companies engaged in purchase and sale in the field of digital currency.
The cryptocurrency business is very promising due to the growing demand for the Ukrainian market, but creating and registering a crypto exchange requires certain knowledge and consistent steps.
Features of a Cryptocurrency Exchanger
A cryptocurrency exchanger is an online resource that provides an exchange of cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), etc., for fiat money (for example, US dollars, Ukrainian hryvnia, etc.) or for another cryptocurrency. The principle of work is to be an intermediary between the seller and the buyer. Both are ordinary platform users; only some want to sell, and others want to buy cryptocurrency.
Exchange takes place in real-time based on data from the most popular crypto exchanges. It is safe to use the services of crypto exchangers if the company operates legally.
Crypto exchanges have been created for people who are far from trading and want to make a one-time exchange of cryptocurrencies. To those who plans To make money from exchange rate fluctuations, you should use crypto exchanges.
The advantages of online crypto exchangers also include:
- exchange is happening 24/7;
- possibility of exchange from anywhere in the world;
- high transaction speed;
- visible exchange rate;
- support for Ukrainian cards (Monobank, PrivatBank).
The main disadvantage of an online crypto exchanger is the limited selection of currency pairs (purchase and sale).
Legal Regulation of Cryptocurrencies in Ukraine
On March 15, 2022, the President signed the Law of Ukraine “On Virtual Assets”. In the future, this law will create a regulatory framework for the open crypto market in the territory of Ukraine. However, its implementation has not yet been completed, so regulatory authorities do not issue financial licenses.
Regulatory authorities include the National Securities and Stock Market Commission. This organization has the right to issue permission to register and operate crypto exchangers and crypto exchanges in Ukraine.
Until the law comes into force, let’s look at the possible options for obtaining a license and opening a crypto exchanger in Ukraine.
On the territory of Ukraine, according to NBU regulation, activities related to cryptocurrency, not prohibited, but not fully permitted either. It is possible to engage in crypto exchange within the framework of a regular currency exchange license within countries.
To register a crypto exchanger in Ukraine, you first need to get a crypto license in one of the European jurisdictions with a sufficient legislative framework, such as Germany, Estonia, Poland or the Czech Republic. After that, it is possible to open a representative office in Ukraine. Now, the activities of the crypto exchanger will be legal, but you must first notify NBU.
The Procedure for Obtaining a Cryptocurrency Exchange License
The procedure for obtaining a license for a crypto exchange is generally the same regardless of the chosen jurisdiction. Of course, each country will have its own problems and difficulties, so it is advisable to familiarize yourself with the documentation requirements and reviews of other entrepreneurs in advance.
The sequence of steps on the way to obtaining licenses:
- Select a jurisdiction by studying its features.
- Register a company.
- Collect and prepare all necessary documents.
- Go through the procedures, AML, and KYC.
- Open an account for a crypto company.
- Bring activities in line with country requirements.
- Appoint a compliance manager.
- Obtain a license for a crypto exchanger.
Thus, the first thing to do is to select a suitable jurisdiction, having carefully studied information about the legislation of this or that country, as well as the nuances of taxation.
Selection of Jurisdiction
Cryptocurrency is legally permitted in countries such as the USA, Japan, Australia, Singapore, Estonia, Malta, Germany, Switzerland, Latvia, Poland, Czech Republic, Georgia, Great Britain, Portugal, Slovakia, and some others.
To obtain a license, it is advisable to choose a country with a stable economy, developed banking and financial legislation, and government support for the cryptocurrency market.
Equally important are the ease, price, and speed of business registration, as well as the availability of preferential taxation for startups.
Legal Registration of the Company
Each country has its own legislation regarding starting a new business. Understanding the specifics laws, which will be applied to the company, many problems can be avoided in the future. Or vice versa. From a financial point of view, it is more profitable to register and operate in a specific jurisdiction.
Different countries have different options for the legal form of business. Most EU countries have portals where you can register online or by proxy.
Collection and Preparation of Documents
Each state has put forward its conditions and requirements for the necessary documentation to obtain a license.
Typically, the list of documents looks like this:
- official permission to operate;
- certificate of registration;
- perpetual loan agreement.
In some countries, this set of documents also requires an entrepreneur’s passport, a certificate of no criminal record, etc.
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Completing of KYC and AML Procedures
KYC and AML are important procedures that various financial institutions (including crypto exchangers) go through before they start working with clients.
KYC (Know Your Customer) is the process of identifying and verifying the identity of a customer, which is carried out systematically to determine the financial behavior of the customer and identify the risk associated with the provision of services to him. In this way, fraudulent and other illegal activities are identified, and risks for the cryptocurrency company itself are minimized.
AML (Anti-Money Laundering) are measures aimed at detecting and preventing the use of financial systems (for example, a crypto exchange) for money laundering or terrorist financing.
The implementation of KYC and AML procedures is not just a bureaucratic requirement. This is necessary to ensure the security of the cryptocurrency organization’s activities and prevent various illegal activities.
Exactly, compliance with AML policy is a guarantee that illegal money will not end up in the middle of legal financial structures.
Opening an Account for a Cryptocurrency Company
Upon receipt of a bank account For a cryptocurrency company, many entrepreneurs face certain difficulties. This happens because most traditional banks, even in the most developed countries of the world, refuse to service accounts of this type of activity.
To open a bank account, you must:
- familiarize yourself with the legal regime for exchanging cryptocurrency in the selected jurisdiction;
- provide the financial institution with the necessary documents in accordance with all requirements;
- adhere to a comprehensive anti-money laundering policy and ensure its application in practice.
Opening an account for a crypto exchanger will not be difficult if you have all the necessary documents and the correct company policy.
Compliance With the Requirements of Countries
Almost every crypto exchanger is, firstly, a website that must meet certain requirements for Internet resources of this kind. Requirements may vary depending on countries. But the main aspects are the same for everyone.
A crypto exchanger should have the following functionality:
- Registration. A simple form is required to enter the user’s email address, login, and password. This is necessary to link a specific person with payment card data.
- Verification. This function is needed to protect user data, especially when conducting large transactions.
- Online wallet. It can be added to your account after registration.
- P2P exchanger. This function allows you to exchange cryptocurrency for fiat and withdraw funds to a card or bank account.
- Payment systems. Necessarily, there must be integration with payment systems such as PayPal, Alipay, QIWI, etc.
- Client chat. Accessible 24/7 chat for clients who are looking for answers to their questions.
- Reviews and rating. The availability of such a function increases user confidence in the resource.
- Technical support. This function is required to resolve problems and malfunctions quickly.
- List of transactions. A useful feature that displays available operations and all transfers for a specific user.
The crypto exchanger must be located on a powerful server to process many requests 24/7. It should have a simple interface combined with a stylish design and wide functionality. Most importantly, the crypto exchanger is obliged to provide its clients with a well-secured wallet.
Appointment of a Compliance Manager
The compliance manager’s task is to control compliance of the company’s activities with corporate requirements, business ethics and legal norms at the level of both document flow and employee communication. Also analyzes data on transaction targets, assesses corruption risks and participates in the development and implementation of a strategy in the field of compliance control.
The functions of a compliance manager include:
- risk assessment of antitrust law violation risks;
- creation of measures aimed at reducing such risks.
Compliance managers play a significant role in ensuring business security. Their activities help to avoid mistakes that can lead to unintended consequences and even possible accusations of economic, tax, and corruption crimes. They are also responsible for preventing corporate fraud and cash leakage.
Obtaining a Cryptocurrency Exchange License
Several requirements must be met in order to obtain a license for a crypto exchange business.
These include:
- KYC and AML;
- ensuring the protection of client assets;
- cybersecurity.
The price of a crypto license can vary dramatically depending on the laws of the jurisdiction and changes in regulation.
The Most Favorable Countries for Obtaining a Cryptocurrency Exchanger License
Study the legislation of the jurisdiction in advance to avoid wasting time and money when applying for a crypto license.
A decent reputation and clear rules are Hong Kong, the USA, Singapore, and Switzerland. A simple solution to various problems in organizing a crypto business – Malta, Cayman Islands, etc.
Singapore
Singapore’s regulatory framework is favorable for cryptocurrency businesses, making it easier for startups to obtain a license. The Monetary Authority of Singapore (MAS) regulates all cryptocurrency activities in the country. Transactions with digital currencies are carried out like transactions with goods.
Key requirements for obtaining crypto licenses in Singapore for crypto exchangers:
- safety and security of client funds;
- preventing attempts at financial fraud;
- transaction monitoring;
- notification of competent authorities about suspicious financial activities.
The next country on the list of the most favorable for obtaining a license is Hong Kong.
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Hong Kong
Hong Kong has led the way in the widespread adoption of digital currency, which is used here, even for healthcare payments. A license to cryptocurrency in Hong Kong is mandatory, even though no laws in this country determine the status of this business.
Advantages of obtaining a crypto license in Hong Kong:
- flexible taxation system;
- transparent legislative framework;
- the simple organization of business;
- state support for the digital currency sector;
- the opportunity to open a current account in banks around the world.
Hong Kong is not an offshore zone, so obtaining a crypto license here is prestigious.
Slovakia
Registration of a cryptocurrency company in Slovakia is quite a complicated process. The business must meet several requirements, and any discrepancy in the application may result in refusal. For example, it is necessary to have a physical office with locally employed staff. It is also important to have a minimum authorized capital of 200,000 euros.
The advantage for cryptocurrency business in Slovakia is an attractive and flexible tax system, thanks to which the cost of obtaining a license quickly pays off.
Poland
Crypto license in Poland is a rather difficult path into the cryptocurrency business. One of the advantages is active government support for this sector of the economy. But there are a number of rules, such as FATF and AML/KYC rules, that must be followed.
The requirements for obtaining a crypto license include opening a “physical” office with hired local staff, authorized capital in the amount of zł 5,000 (about $1,200), and a business plan for three years.
Bulgaria
Registration of a cryptocurrency company in Bulgaria – a popular solution due to convenient legislative framework and favorable economic environment. Simple requirements for obtaining a crypto license in this jurisdiction attract entrepreneurs. No need to create a “physical” office, and the founders and directors of the company can be non-residents of this country.
Advantages of obtaining a crypto license in Bulgaria:
- Some of the lowest tax rates in Europe.
- Registration business is faster and easier than in other EU countries.
- Availability of opening and running a company.
In this regard, cryptocurrency regulation in Bulgaria can benefit both startups and large companies.
Support in Creating a Crypto Exchange
The cost of creating a cryptocurrency exchanger depends on the features, functionality, and design of the platform itself. Ready-made (template) solutions can cost less – about $5,000, while individually developed ones will cost much more – from $10,000.
To create a crypto exchanger in Ukraine, you must be patient and attentive. The decision can become successful and profitable provided that all the components are in place and working correctly.
To achieve this goal, it is necessary to take into account many conditions, as well as develop a detailed project development plan. The best choice is to turn to specialists who can help you determine the blockchain platform, programming language, database and other technologies based on your requirements.
How to Open a Crypto Exchange in Ukraine
First, you need to register a company and get a license to operate with cryptocurrency in a country where it is regulated by law. When the license is received, a representative office should be opened in Ukraine in order to carry out activities in its territory. At the same time, the NBU must be notified.
Lawrange specialists will help you to understand the issues related to obtaining a license and go all the way to creating a cryptocurrency exchange.
Why You Should Contact Lawrange
The company has been working in the field of legal support for businesses in various jurisdictions for more than 10 years, having the moment of representation in all key regions of the world. Thousands of successful multidisciplinary projects and tens of thousands of satisfied clients behind.
If you need help or support while registering a business or obtaining a license for cryptocurrency activities, contact the Lawrange team. We are ready to provide you with comprehensive support and take care of all legal aspects and basic processes for obtaining a license.
Conclusions
To open a crypto exchanger in Ukraine, you must go through a difficult path. Starting from choosing a jurisdiction, studying local legislation, and learning all the nuances of taxation and doing business. Finishing the creation of the website, its compliance with the requirements of the chosen jurisdiction, and technical support.
All this is simpler and much faster and can be done with the help of experienced professionals. They will help you economically and technically competently organize the process of obtaining a license for cryptocurrency activities.
Team Lawrange has impressive experience, thanks to which your company will soon bring you profit in the rapidly developing world of cryptocurrencies.
FAQ
Which government bodies regulate the activities of crypto exchanges in Ukraine?
Regulatory authorities include the NBU and the National Securities and Stock Market Commission. It has the right to issue permission to register and operate crypto exchangers and crypto exchanges on the territory of Ukraine.
What are the requirements for the founders and managers of a crypto exchange business?
Typically, the following requirements are imposed on company founders and managers to obtain a crypto license:
- No criminal record for tax crimes, forgery of documents and money, attacks on property, and crimes directed against state bodies, justice, and local government.
- Proof of competence in the cryptocurrency industry.
If there is no such confirmation, you must complete a training course.
What taxes must you pay when running a crypto exchange business in Ukraine?
When running a crypto business in Ukraine, the trader must pay taxes if money is cashed out. You can pay monthly taxes using the minimum payment from Internet activities (for example, as an individual entrepreneur).
