In recent years, the way assets are exchanged and managed has undergone a significant change. The financial industry is transforming into an entirely new, technologically-driven industry. Cryptocurrency exchanges and blockchain technology are changing the pace of the asset and the financial sector, leading us towards a completely digitized future.
The full potential use-cases of blockchain in the financial sector are still yet to be discovered by an array of people. Many banks and financial institutions have still not adopted blockchain and crypto. But despite that, the crypto exchange market volume and market capitalization have increased exponentially.
A broad range of crypto entrepreneurs prefers having their own cryptocurrency exchange platform. This is because it is the most convenient and simple way to help traders exchange their cryptocurrencies with anyone living on the other side of the world. And with blockchain backing up the exchange, there are various other benefits involved, such as swift, secure, seamless transactions added with blockchain’s immutability, user transparency, anonymity, etc. This drives investors towards a crypto exchange, thereby boosting profits for the exchange owner.
If you want to create your own crypto exchange, the most crucial aspect that you need to know about is the legalization of your exchange. If you’re a novice entrepreneur, this blog will help you understand everything you need to know about cryptocurrency exchange legal solutions for your exchange. So, let’s dive in.
Legalizing your cryptocurrency exchange
As the explosion of interest in these digital currency trading platforms emerged, there is also an equally growing need for understanding the legal implications of it. Any trade business that involves the exchange of fiat to crypto, or crypto to fiat, mandatorily requires a banking license or have to partner with a licensed bank/ payment processor.
The opacity involved with the legalization of digital currencies and digital currency exchange platforms is due to the fact that the concept is still considered relatively new when compared to traditional currencies or traditional exchange systems. For your understanding, let’s explore some of the legal implications involved with cryptocurrency exchanges across various parts of the world.
Legal implications associated with crypto exchanges
The expansion of crypto exchanges has widened all around the world, and many business entities have started looking for ways to regulate their crypto exchange and blockchain-based businesses. To cope with the ever-growing scenario, different approaches are used in different countries. Some are trying to establish a strong legal framework to gain better control over their crypto markets. Whereas some are even forbidding crypto exchanges. Let’s take a look at some of the significant regulations in different countries,
- Estonia– Estonia is considered one of the pioneers to have introduced legalization for blockchain and crypto-based businesses. To commence a crypto exchange business in Estonia, the exchange must be registered under Estonia or a registered branch office in Estonia, follow KYC procedures, etc. Also, the exchange must obtain a license under MLTFPA( Money Laundering and Terrorist Financing Prevention Act).
- Singapore– Crypto exchange platforms must register under the Accounting and Corporate Regulatory Authority in the city-state. Then the license for the exchange must be issued under MAS( Monetary Authority of Singapore).
- United States – In the United States, trading of cryptocurrencies is regulated at both federal and state levels. Crypto assets that match the definition of security need to comply with the SEC (Securities and Exchange Commission), under US securities law. Also, AML compliance and other U.S Federal regulations should be followed.
- Canada – Cryptocurrency exchanges are subject to the Canadian securities law. AML and money services business laws are also applicable to crypto exchanges operating in Canada, or with Canadian clients.
- Australia – The exchange operators must hold an Australian market license authorized by the ASIC (Australian Securities and Investment Commission). AML/CTF imposed on the exchanges should be registered with the AUSTRAC (Australian Transaction Reports and Analysis Centre).
- United Kingdom – Crypto exchanges in the UK need to register with the FCA (Financial Conduct Authority).
- Japan – Japan is probably the country that has the most progressive regulatory atmosphere for cryptos and crypto exchanges. The exchanges have to be registered with Japan’s FSA (Financial Services Agency).
These are a few notable examples of how cryptocurrency exchanges operate on different regulations in different countries. With the tremendous expansion of the market volume, the list will go on that you will need a separate blog to explore that area on the whole. For now, let’s focus on how to make your exchange legally compliant.
What is the best way to make your exchange legally compliant and rock-solid?
As mentioned earlier, even though cryptocurrencies and crypto exchanges have earned tremendous popularity, many financial institutions still find it hard to understand the regulatory norms. There are a multitude of complexities and procedures involved in legalizing a crypto exchange. And, it consumes a lot of time and demands a substantial level of experience and knowledge.
If you are planning to start your crypto exchange business, the best option is to seek experts’ advice on legal and financial terms. And, to conduct massive research, and choose a well-experienced team in the field to take care of your exchange legalization part.
At Blockchain App Factory, we have a team of market leaders, who are early adopters of such services, with incomparable experience and knowledge in the field. Our experts will help you with cryptocurrency exchange legal services that will build a solid base and sustain your exchange business in the long-run without any glitches.
Our crypto exchange legal services include, but are not limited to,
- Crypto exchange legal consultation services
- Eliminating litigations and disputes between the crypto exchange platform and the customers.
- Proper legal compliance and licensing for the exchange.
- Token sales and exchange listings comply with the SEC.
- Investment Management agreements and crypto funds.
Be it any country, any geographical area that you want to operate your exchange from, our crypto and blockchain specialists will help you with everything you need. Our services cover right from legal consultation, implementation, explaining the regulatory norms, and the advantages for you, etc. Our highly skilled legal team is well known for securing and enforcing legitimate privileges for your exchange to operate smoothly and stand out from your wide-spread competitors. To know more, commence a conversation with our qualified team of experts.