Types of licenses for managing crypto assets

The cryptocurrency business provides extensive opportunities for exchanging, buying, selling, trading, storing, and managing digital assets. Each of these actions requires an appropriate license in the company's country of registration. However, there are scenarios where a cryptocurrency management license is not required. Let's look at this issue closely with Antwort Law, which specializes in supporting cryptocurrency projects.

So, we highlight three key models of licenses for managing crypto assets. The first is providing software connected to the client's crypto wallet to perform trading operations automatically. By creating such software for a client with the ability to configure algorithms manually, your activity is exempt from controlled licensing. However, you will not have direct access to managing client assets in this case. Some companies prefer a hybrid approach, providing management advice to their clients on a corporate website, thereby avoiding direct management of their portfolios.

The second model is active management of clients' crypto assets with full access to their electronic wallets and control over operations. A management license is required in this case, but it varies from jurisdiction to jurisdiction. In Cyprus, for example, obtaining an investment advisor license is possible. Note that an investment advisor can accept the client's cryptocurrency into his wallet, but this will require an additional license, so this option is not popular. For clients seeking direct management of their assets, we also support obtaining and adapting licenses in the UAE, VFA Class 4 licenses in Malta, and similar licenses in Lithuania and Poland. Such licenses will open up broad prospects for the effective management of cryptocurrency assets in accordance with international standards.

The third model is collective investment management, where the crypto assets of a group of investors are combined into a single electronic wallet managed by an experienced manager. This licensed type of management usually requires registration of the investment fund as well as the management company. We offer our clients a wide selection of jurisdictions most suitable for this type of license - Estonia, Poland, UAE, Malta, and Cyprus.

... Sometimes the difference between whether a license is needed or not, as well as between different types of licenses for a crypto business, is not at all obvious.

In order to make sure that you make the right choice, we recommend contacting professional lawyers, and as an option for confirmation, you can contact the regulator in a particular country to obtain their conclusion on what type of license is needed.

We know many regulators in many countries, so contact the consultants of the Antwort Law team, they will always be able to help you. ...

Vladislav Makarenko, managing partner of Antwort Law

The choice of a crypto asset management license depends on the company's business model, its plans for the future, and the chosen jurisdiction. As noted in the first crypto asset management model, avoiding obtaining a controlled license is possible. However, licenses are required in most options for managing client crypto portfolios. Our practical knowledge of the cryptocurrency industry allows Antwort Law to provide reliable solutions for effective asset management in accordance with legal standards. Contact us for professional advice and effective development of your cryptocurrency project.

Lidia Ivanova

International Lawyer
Antwort Law

In what cases is a license to manage crypto assets not needed?
A license is not required if you sell software for automatic trading, that is, you do not manage clients' crypto assets and do not have access to their electronic wallets.
Where is the best place to open a crypto asset management company?
In our experience, the most favorable jurisdictions for running crypto projects are the UAE, Estonia, Poland, and Malta. In other countries where cryptocurrencies are also regulated by law, opening and running such a business is also possible. The choice of jurisdiction depends on your case: the activities and goals of the company, the citizenship of the founders, the planned turnover and the target client audience of the company.
When do you need to obtain a license to manage crypto assets?
A license is required if you plan to have full access to client accounts on the exchange and actively manage client crypto portfolios. Also, a management license is required in the case of collective investment, when the crypto assets of a group of investors are combined into a single electronic wallet managed by an experienced manager. As a rule, an investment fund and management company are registered for this purpose.
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