New technologies are gradually penetrating all spheres of human life. The financial sector has been significantly transformed in recent years, becoming more technologically advanced, so that entrepreneurs now have a wide range of innovative tools at their disposal for comfortable, successful business. Fintech companies represent a serious competition to traditional financial companies, as they can offer their clients highly developed service, lightning-fast reaction and fast transactions.

 

The sphere of digital finance is at the stage of formation and modification, so the legislation of different countries does not always have time to introduce adequate measures for its regulation. Various uncertainties in the control of fintech companies cause misunderstandings and difficulties in business operations. It is crucial for startups operating in this field to stay abreast of any, even the slightest legislative initiatives. For this reason, legal services for fintech projects are a vital and extremely useful function.

 

Advantages of legal support for FinTech projects

If you are interested in launching a FinTech project in your home country or abroad, we recommend using the assistance of the specialists of Lawrange Law Office. We offer a full range of services to help your business:

 

  • make a quick start;
  • work efficiently;
  • generate revenue;
  • avoid problems with tax and other regulatory authorities.

 

Thanks to professional legal support and modern financial technologies, existing market players will be able to diversify their product range, effectively manage risks and reach a wide clientele. With our lawyers, you will be able to recognize all potential difficulties and find ways to prevent them at an early stage, which will allow your business to grow and develop.

 

Ensuring legal security

Our attorneys will help to ensure compliance with existing standards and offer the least risky option of applying certain fintech solutions. Knowledge of all the nuances of the legislation governing this.

 

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Area allows experienced professionals to customize the work of the company in strict compliance with the requirements of the local regulator, tax authorities and other government services. This will significantly reduce the risk of problems with the law, as well as ensure the full legality of the company. This is made possible by bringing documentation into full compliance with regulatory requirements, developing the least risky algorithm for implementing fintech technologies, etc.

 

Protection of investments and assets

Legal support for FinTech projects implies the possibility of applying business tax planning mechanisms, which significantly reduces the risk of losing one’s own assets. Lawyers will assess the risk of splitting a business, consider the application of special taxation regimes, clarify the existence of overdue accounts payable, and also help to structure the company effectively in order to increase its economic efficiency. All this together contributes to the reliable protection of assets and investments.

 

Preventing legal disputes

Preventing as well as resolving legal disputes requires high legal qualifications. When performing this task, the lawyer clarifies the terms of the agreement, possible risks, determines the expediency of making changes to existing corporate structures. He helps to select the most effective tool to prevent a dispute, such as a corporate agreement or asset control. If a legal dispute arises, he will advise whether it can be resolved through mediation, “freezing” or, for example, withdrawal of participants from the company, etc. The risks for the principal, judicial prospects, formulation of a legal position, etc. will be assessed.

 

Creating a favorable business environment

The success of a fintech project is 80% dependent on the right environment, which is an invaluable asset. Having experienced, strong, professional experts in your team will allow you to gain the necessary experience and see mistakes, develop new markets and attract the missing audience. It is quite difficult to build a business environment from scratch, and legal support for FinTech companies makes this task much easier and quicker.

 

Peculiarities of legal regulation of fintech

The FinTech sector is based on the application of various innovative technologies such as blockchain, Web 3.0, etc. It covers diverse areas ranging from payments, insurance to security, data and analytics. At the core of fintech is the integration of all sorts of technical innovations into the financial sector. One of the features of the financial technology industry is its huge potential for development and further growth. In 2021, the share of fintech in the global market was $115.3 billion, and by 2030 it is expected to grow to $936.5 billion.

 

For the successful launch of any project, it is crucial to take into account the FinTech regulatory environment, which, depending on the country, is regularly modified and improved. For example, e-wallets and cryptocurrencies are a relatively new phenomenon that are not subject to traditional financial legislation. Thus, new laws need to be introduced, which takes a certain period of time. At the same time, fintech continues to bring new instruments to the market. As a result, within the legislation of a particular state, one may face some uncertainties regarding the model of fintech projects’ operation. Therefore, it will be quite problematic to ensure the stable operation of such a company without professional legal support.

 

The role of regulators in the FinTech industry

One of the main objectives of regulating this area is to protect against cyberattacks. The legal framework of most countries implies that settlements should be carried out in compliance with rules that would prevent any illegal activity. Such measures are ultimately designed to protect not only users but also service providers. Every fintech project is a potential source of possible threats. In turn, regulation is designed to minimize the risk of attacks without disrupting the implementation of market participants’ needs.

 

Each country has its own regulatory body whose job is to control the activities of fintech companies. At the same time, there is an international body – the Financial Action Task Force (FATF). It develops standards for combating money laundering, terrorist financing and other financial crimes, which other jurisdictions implement into their legislation. All businesses operating in this industry are required to be structured in accordance with the legislation in force in a particular country.

 

Important! The launch of a successful fintech project is possible only if there is competent legal support. A company will be able to function fully if it protects intellectual property and respects the interests of its owners, clients and employees. All of this and much more is helped by competent legal registration of FinTech projects.

 

Compliance with international regulations and standards

Regardless of where the fintech project is set up, it is necessary to comply:

 

  • Anti-Money Laundering (AML) standards are one of the main objectives of any fintech company. By complying with the basic AML provisions, an enterprise will be able to fully conduct its core business.
  • Know Your Customer (KYC) requirements – These requirements were initially introduced for traditional financial institutions and then gradually started to be applied to the fintech industry. Compliance with KYC policies means that a company can identify its customers, reducing the risk of fraud and tax evasion.
  • Data security requirements – improper data management, storage or deletion can have a negative impact on security, which is unacceptable when operating a fintech company.
  • Digital Signature Standard – any financial institution is required to use digital keys in its operations to ensure effective verification of customer identity.

 

Types of FinTech projects

Fintech companies apply modern information technologies in their work to achieve maximum optimization of their own operations and improve user experience. There are dozens of different types of fintech projects – some are more common, others are less common. But in any case, all of these companies are representatives of a rapidly growing segment of the financial market.

 

Crowdfunding

Crowdfunding platforms make it easy to raise capital for projects without having to approach banks or venture capitalists. Fintech innovations in crowdfunding offer micro and small businesses a way.

 

to connect with investors for funding. Some fintech companies in this category work to bring investors to promising startups. Others use virtual fundraising to facilitate investment in a new business.

 

Crowdfunding networks allow users to receive, send money online or through mobile apps. They help businesses or individual entrepreneurs conveniently use one place to pool funds from various sources.

 

Electronic wallets

Electronic wallets are quite popular today. Everyone is familiar with this technology, especially after the COVID pandemic. The popularity of e-wallets is due to the fact that they are secure, convenient, contactless and an innovative way of making quick payments. Given the ever-increasing demand for e-wallets, experts believe that such cashless payment methods have a promising and promising future ahead of them.

 

Neo banks

New banks have significantly changed the banking system. With the advent of neo banks, there is no need for physical infrastructure or banking operations. Such projects have become very popular among users as they are affordable, easy to set up and safe to use. The best thing about them is that they are available 24/7, meaning they can be accessed from anywhere and anytime. Neo-banks are revolutionizing the banking sector and offering convenient banking services to the users. The success of such projects shows that this fintech sector will only grow in the future.

 

Investment platforms

Online investment platforms allow investors to buy stocks or mutual funds without charging a commission. Such companies use data on the performance of financial assets for large traders, thereby influencing stock prices.

 

Investors prefer to work through online investment platforms because they do not have to overpay. Although the price paid when buying shares is slightly higher than the actual price, the amount saved ends up being much higher than the commission when trading through conventional means.

 

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International money transfers

Traditional money transfers have high transaction costs. In addition, they are characterized by low speed of execution. However, fintech companies offer faster and less expensive international money transfers. Some modern fintech firms are able to send money anywhere in the world in seconds.

 

Peer-to-peer lending platforms

One of the new and popular types of services today is peer-to-peer banking or p2p. This technology is based on a completely new principle of lending, without the involvement of intermediaries. The control of operations and security of transactions is carried out by special online platforms. Banking on the basis of a peer-to-peer network provides for decentralization, thanks to which each participant manages to make decisions and control his financial transactions independently.

 

Cryptocurrency exchanges

Such companies are an online trading platform, through which it becomes possible to buy, sell, exchange and store cryptocurrencies. There are also crypto exchanges that provide an opportunity to trade options and other cryptocurrency derivatives. One of the main features of such fintech projects is the ability to function without intermediaries.

 

Licensing of FinTech projects

A fintech license is a document that authorizes a company to conduct a certain type of activity in a particular country. It is issued by regulatory authorities with certain requirements for licensees. There are many types of licenses, which differ in price, the amount of preparatory work and the range of services that can be provided after obtaining them.

 

E-money Institution license (EMI)

Electronic Money Institution – Electronic Money Institution (E-money) license, a lighter version of the banking license. It is suitable for companies providing innovative payment services. It also allows companies to issue their own electronic currencies. Obtaining an EMI license is necessary for those companies that plan to carry out:

 

  • exchanging cash for your own E-money;
  • money card transfers;
  • offline and online payment transactions, etc.

 

Some jurisdictions have varieties of EMI license:

 

  • Small EMI – no more than 5 million euros may be issued per reporting period.
  • AEMI is an authorized e-services institution that can issue E-money in the European Economic Area in excess of €5 million per reporting period.

 

Payment Institution license (PI)

Obtaining a PI license allows you to provide various financial intermediary services, from replenishment of accounts in other payment systems to the execution of transactions when the credit line covers the funds used. The analog of Payment Institution license is API (Application Programming Interface – payment gateway license). PI licensing opens huge opportunities for entrepreneurs to develop their own business both in the EU and abroad. The authorized capital required is between 20,000-125,000 euros, which depends on the chosen legal form.

 

License for cryptocurrency exchange

Cryptocurrency licensing helps governments regulate the blockchain industry, thus ensuring safety for all market participants. Obtaining a cryptocurrency license allows a company to engage in providing services:

 

  • Exchanging crypto to each other, or to and from fiat funds.
  • Crypto exchanges with a full set of useful tools for trading.
  • Wallet – storage of cryptocurrency assets.
  • By ICO Initial Coin Offering.

 

A prerequisite for licensing, regardless of where the crypto company is incorporated, is compliance with AML/CFT policies.

 

Financial Institution license

Obtaining a financial license is necessary for companies that are engaged in banking, brokerage activities, including accepting deposits from the public, exchanging foreign currency, trading in securities, etc. The conditions for obtaining such an authorization document depend on the specific type of activity of the company and the policy of the Regulator.

 

Legal services to support fintech projects

Clients of Lawrange can take advantage of comprehensive solutions that will help them to successfully start a business or bring it to a higher level. Within the framework of legal services, you can obtain the following:

 

  • Registration of fintech companies – our experts will assist in business registration, including abroad, taking into account the wishes of the client and the peculiarities of local legislation.
  • Licensing – we take care of preparing and overcoming all stages of obtaining a license for e-money institutions, payment companies, crowdfunding, etc.
  • AML/CFT compliance – experienced attorneys guide and assist with regulatory compliance. The extensive experience and requisite knowledge of narrowly qualified professionals provide entrepreneurs with the ability to navigate a complex legal environment.
  • Business counseling – assistance is provided in preparing a business plan, identifying potential funding sources, and expert advice as your business grows.
  • Intellectual property protection – assistance in registration, protection and contestation of trademarks. We also assist in resolving domain name disputes, patent disputes, etc.
  • Support in court disputes – consultations are provided at each of the stages of judicial resolution, measures are taken to resolve the conflict at the pre-trial stage, all necessary documents are checked and prepared, the client’s interests are represented during the court session.
  • Legal support during financial transactions – we help to clarify possible risks and pitfalls of the transaction, determine the prospects of participation in the bidding process, avoiding errors in documentation, unfavorable terms and other miscalculations.

 

Why contact Lawrange

By contacting our law firm, you have the opportunity to:

 

  • Take advantage of professional legal services on fully transparent terms – all the nuances of cooperation are discussed and entered into the contract.
  • Advise on emerging legal issues at any time – we are always on call for our clients.
  • Quickly resolve problems and challenges arising in the course of registration, licensing and further operation of a fintech company.
  • Be confident in the safety of your information – we guarantee complete confidentiality and protection of client data.

 

Conclusions

Legal support for FinTech projects is a highly demanded comprehensive service among all kinds of IT companies, stock and cryptocurrency exchanges, neobanks, crowdfunding platforms, etc. The presence of a fintech lawyer ensures stable and efficient operation of the company, minimizing all kinds of risks. Turning to Lawrange you can get assistance in registration of a legal entity, the necessary license depending on the type of activity and the requirements of the Regulator, as well as other extremely useful services. You can consult on cooperation and the range of legal assistance provided by contacting us in any convenient way.

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