Features of the functioning of cryptocurrencies in Czechia

In the EU countries, there is no common opinion on perceiving cryptocurrencies. Some perceive it as e-money, others as a way to perform financial transactions, and in Czechia, as a commodity. Obtaining a cryptocurrency exchange license in Czech Republic is relatively easy, and this applies to other EU territories as well. This country is one of the most progressive in IT technologies, so the crypto business feels quite comfortable here.

Primary requirements

Each country that offers to obtain a crypto license sets its own rules and requirements for candidates. So, in the Czech Republic, it matters:

• Officially registered legal entity;

• Certificate of good conduct;

• The company must have an open bank account and website;

• One of the team members must have a higher education and work experience in the financial sector.

In addition, the owner of the company must provide the regulatory authorities with complete information about the company (field of activity, business plan, risk assessment, and much more).

It is worth noting that the Czech Republic is one of the few countries where business feels as comfortable as possible. There are no excessive taxes, all-consuming corruption, and other problems that hinder the development of companies. A reasonably simple mechanism has also been created here to register an organization remotely.

So, if you are the owner of a cryptocurrency exchange, for example, in the USA, and want to expand your business in the EU countries, you can create a company remotely. Both the founder of the company and his/her authorized representative can apply for a license. So, you can send your employee on a business trip to Prague (power of attorney must be made before leaving) or seek help from a local company that specializes in providing such legal services. In this case, you conclude a contract, draw up a power of attorney, and the specialist will conduct all business on your behalf. The second option is more convenient and practical since an employee of such a company has extensive experience, knows what documents are needed and how to draw them up correctly, and understands why you may be denied a cryptocurrency exchange license in Czech Republic.

What are the points to pay attention to?

The government of the Czech Republic is concerned that many crypto business owners are evading taxes, facilitating scammers and criminal elements, and helping to circumvent government regulation in various matters. They open a real hunt for crypto exchanges that operate without a license.

So, if you doubt whether the idea of ​​obtaining a crypto license is correct in the Czech Republic, this is of great importance. Suppose local authorities find organizations that operate without the necessary permission. In that case, they seek to do everything possible to block the site and bring the owner a criminal or administrative liability. Typically, such litigation ends in a massive scandal, and the crypto company loses trust among users, which leads to collapse.

So, we have found out that a crypto business must obtain permission for stable work in the Czech Republic. But what else could be the problem?

The National Central Bank introduced a ban on opening accounts for cryptocurrency exchanges. But, as already mentioned, having a bank account is one of the crucial criteria for obtaining a license. Thus, the applicant has to open an account in another jurisdiction than in the Czech Republic. Usually, company owners choose Lithuania or Estonia for this, where loyalty to the blockchain and crypto business is even higher than in the Czech Republic. Lithuanian crypto licenses are also very popular.

The Czech Ministry of Finance requires that all financial transactions be carried out, taking into account the verification of the identity of each participant in the process. Thus, you cannot cooperate with anonymous users. Each client that registers in the system must go through the verification operation. You must be sure that he or she has not previously had problems with the law in fraud or financial manipulation.

At the same time, you must ensure that the personal data of your customers do not fall into the hands of third parties. You need to set up excellent protection, and all customer data must be encrypted.

However, if one of your customers is suspected of fraud by regulators, they may request information about the person and the transactions. If you refuse to provide such data, you risk losing your license.

Your company should have a person on staff who will regularly provide a report on the exchange activities to the regulatory authorities. If it doesn't turn in on time or mistakes are made, you also risk losing your cryptocurrency exchange license in the Czech Republic.

If you decide that the existing regulations in the Czech Republic do not suit you, you can obtain permission in other EU countries.